Methodological Paper, Essay Example

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Essay

Introduction

Construction project management is undergoing unprecedented change.  In addition to new regulations and environmental challenges to traditional building methods, state and local governments, facing substantive fiscal constraints, are trying innovative new methods to pay for construction projects.  Construction management at-risk is at the forefront of payment reform: Construction management at-risk shifts a portion of risk to the contractor who is responsible for managing the project in the initial design stages, and then transitions into the traditional vendor (building) role after the design component is finished.

Although numerous states have adopted regulations supporting construction management-at-risk projects, the adoption of the model has not been universal across states or across industries.  The efficacy of construction management at risk versus other project management models is a seminal question in the mind of state policymakers and construction firms looking to explore the model in greater depth.

Statement of the Problem

The problem being addressed in this study is a comparison between the use of construction management at-risk and other project management models to figure out the advantages of using different project management methods in different industries and or geographies.

This problem is important because although the project management technique has emerged as a plausible alternative in private project management, some state and local governments are researching its plausibility for public projects, particularly as a way to change the bidding process and make it more efficient (Minchin, 2009).

The concept of construction management at risk (CMAR) has fundamentally changed how construction projects are managed in numerous industries (AIA, 1996).  Unlike the methodology prescribed in other popularly used methods such as design-bid-build, CMAR focuses on one individual serving as a building consultant (agent) during the pre-construction phase of the project, who then transitions to a traditional management role during the building phase (Transportation Research Board of National Academies, 2010).  The management system has afforded construction managers new flexibility regarding how and when decisions are made in the construction process; construction managers also assume higher levels of risk than they would under another management system (Kenig, 2000).  CMAR has introduced a new set of construction management innovations that have not been fully explored in a robust comparative context. (Minchin, 2009; Minchin, Thakkar, & Ellis, 2007).

With an increasing number of state governments contemplating whether to consider CMAR bids for construction, the specific problem to investigate is in which industries does CMAR evidence a more cost-efficient and successful building process (Minchin, 2009; Kenig, 2000).  This problem is particularly interesting due to the existing bifurcation between public and private use of CMAR: CMAR has a longer history of use in private projects, while public adoption of the construction model is gradually gaining acceptance (Tulacz, 2002).  Greater knowledge about where CMAR has proved successful would be useful in many different circumstances.  Construction companies could bid more effectively and competitively in certain industries where the model is used successfully; policymakers could regulate construction bidding more effectively knowing where CMAR bids are likely to be more successful than other projects (Walewski, Gibson, & Jasper, 2001; Minchin, 2009).

The study will use a qualitative methodology to explore this topic.  In particular, the qualitative study approach will consist of two different portions: 1) A survey and interview of construction project managers to assess where construction management at-risk is being used and the benefits and detriments associated with the model; 2) Based on the qualitative research, several case studies will be produced looking at particular industries where the model has been used effectively either in a public or private bidding context.

Purpose of the Study

The purpose of this qualitative study is to determine in which contexts construction management at-risk is used effectively, and to produce case studies that may be generalizable to emphasize which heuristic factors should be considered in choosing a construction project management model.

Although it is not possible to make an apples-to-apples comparison with construction management at-risk projects (because no counterfactual is observed when the same project is conducted with both methods), inferences can be made regarding different project management styles.  The studies will focus on identifying different advantages and disadvantages of the project management style.

The study uses a mixed methodology to answer the posited research questions. The choice of a mixed methodology, over one that uses only qualitative or quantitative methods, is based on two main considerations.  First, there is limited quantitative data related to construction management at-risk projects: Due to the newness of the methods and hesitance by states to allow it for public bidding projects, there are not extensive data sets to base the entire project on. At the same time, the limited data is important in understanding early outcomes associated with the project management style and should be analyzed.  Second, with the limited nature of quantitative data in mind,  qualitative methods to cull the experience and opinions of project managers in the field would be highly valuable in understanding the potential advantages and disadvantages of the project management method.  Thus, the newness of the subject coupled with existing resources in the industry were the main reasons a mixed methodology was selected.

Brief Review of the Literature

The concept of construction management at risk is a practical method of procurement that emphasizes a bidder’s particular qualifications for a project rather than a single focus on price (AIA, 1996).  Unlike a traditional project management scheme that focuses on a singular, unchanging role throughout the project, the role of the construction manager changes in construction at risk depending on the stage of the project.  In the initial stages, the construction manager serves as a consultant to the project’s owner; he or she provides consulting services during the development and design phases.  Once the “pre-construction” phase has finished, the construction manager changes back into the traditional role: the general contractor during the building phase of the project (AIA, 1996).  The flexibility of the construction manager during the project is one of the key advantages of this management method that has advantages and disadvantages.

There are a number of advantages and disadvantages to the construction management at risk form project delivery.  As the Transportation Research Board of the National Academies points out based on an existing literature search, there are five main advantages.  First, the constructor (or whichever entity controls the process) can have substantial decision making power throughout the process; this includes making substantive input to the design and implementation of the project (Transportation Research Board of the National Academies, 2010).  Other potential advantages include: (a) the enhanced ability to accelerate the delivery’s project schedule; (b) enhanced cost certainty at an earlier point in the design process than design-bid-build; (c) the ability to dampen volatility inherent in the project management process due to changing prices; and (d) the owner holds natural control over the pace and scheduling decisions of the project (National Transportation Board, 2010).  The four most commonly cited disadvantages were: (a) Reconciling potential conflicts between the construction manager at risk and the designer; (b) The owner must administer two contracts- a design and a construction contract; (c) There is uncertainty regarding the final price until it is finished; (d) Related personnel must be trained to understand and properly implement elements of the CMR project delivery (Transportation Research Board of the National Academies, 2010)

Although this type of project management is new, it has already been used in a number of different settings: (a) traffic project procurement, (b) school building procurement, and (c) general building procurement (Cunningham, 2005).  The National Transportation Board (2010) states that numerous states and department of transportation’s across the country have either undertaken projects with or experimented with portions of projects that included CMR project delivery.

Research Method

In explaining why a qualitative study methodology is preferred for this study in answering the related research question, first, an explanation must be given for why a quantitative study design was not chosen. Overall, a quantitative study would likely be preferable in this context under the following conditions: 1) There were complete, quality data sets at the federal or state level that contained data that could be readily operationalized to assess a project’s construction management type, the total cost of the project, and whether the project finished on time. 2) If construction management at-risk was a typically used construction project management model across states and industries that would allow for a robust comparison of different project management models in different situations.

After an extensive search, however, neither of the criteria listed above are met.  That is, although some states do keep data related to projects finished in the state, the completeness in identifying which project method, as well as the cost and timeliness of completion would not lend itself to a robust statistical analysis.  Furthermore, construction management at-risk is not a typically used project management model: Indeed, while some states have passed statutes allowing for its use in project bidding, a majority of states either have not passed related statutes or have passed statutes that place restrictions on the model that do not allow for full risk assumption by the contracting party.  This later restraint is important; indeed,  a quantitative analysis would essentially operationalize all projects across states and industries as “construction management at-risk”- this, however, would include such wide variation due to different statute variations and a small sample size that any generalizations regarding the project management model would not likely have a high level of validity or policy relevance.

A secondary data analysis would not be the best option for the reasons stated above; a quantitative study using survey data would suffer from similar problems.  Although survey data would possess one large advantage over secondary data, essentially more complete, the method would still suffer from two primary shortcomings: 1) operationalization; 2) extrapolation of results.

A qualitative study design, while certainly not perfect in its own right, is likely the ideal methodology to address the research question.  The qualitative study design would be composed of two different sections: 1) Interviews with firms that use construction management at-risk and compete with firms that use the method; 2) Case studies based on interviews (and follow-up) that will present roughly five projects as heuristic benchmarks for further research in the industry.

The first component of the qualitative methodology would focus on approximately 100 interviews with construction project managers; the sample of construction project managers would include those who are based in construction management at-risk firms and those that compete against such firms.  The initial allocation of interviews is: 50:50.  Indeed, in order for this part of the project to be successful, there should be a close parity of interviews on both sides to ensure that bias is partially controlled for in the given answers.

The interview given to project managers will contain roughly 10 questions; in addition to basic questions on firm size and experience in the construction project management industry,  the questionnaire will also ask the managers to list advantages and disadvantages associated with different construction project management styles.  The reason additional questions are asked to the personnel is to prevent bias that is associated with one potentially being too close to the project management style.

Once the interviews are done, they will be analyzed using grounded theory analytical technique to determine which aspects are considered to be advantages of the construction management at-risk model and which are considered to be disadvantages. In order to increase the transparency, all of the interviews will be entered into a data file and analyzed using NVIVO to discern patterns in the responses.

Once the interview and analysis is complete, the second phase of the project will begin.  The second phase of the project will focus on producing case studies that illustrate the advantages and disadvantages identified by the heuristic analysis above.  Although the total number of case studies has not been identified, roughly 3-5 would be appropriate looking at the number of interviews that were conducted. The case studies will be selected based on a number of criteria including consultation with interviewed project managers and individual research.

The decision to use a qualitative research design was based on the following factors: 1) Construction management at-risk is a new model and a new topic meaning that qualitative research is appropriate in gaining a more in-depth understanding; 2) The use of qualitative methodology is more in line with a more macro research question that looks at the possible advantages and disadvantages of the method.

Because construction management at-risk is a new project management method, the literature for the topic is evolving.  Indeed, while there are certainly project management textbooks that explore the main tenets of the theory, very few sources have extensive analysis of the project management style in “real-world settings”- perhaps even more importantly, little comparative work has been done to understand its strengths vis-à-vis other typically used project management methods.  Thus, this project’s qualitative emphasis would be an important contribution to the existing literature: The project not only aims to provide a robust qualitative heuristic examining the strengths and weaknesses of the method, but also plans to produce case studies that will allow policy makers to understand how to include the method in bidding cases and what statutes may be important. As for all qualitative research, one the main questions will be: to what extent is this study generalizable to larger policy contexts examining the use of construction management at-risk?  While there will always be threats to external validity, based on the dearth and unrepresentative nature of data in the field, the level of generalizability for qualitative research is likely equal or higher to a data set produced at either the state or federal level.

The second advantage of the qualitative research design is that comports with the research question of understanding the strengths and weaknesses of the project management concept.  Indeed, while data might be able to speak to questions of efficiency and cost, the qualitative methods are superior in identifying factors (directly from managers) where this is the case.

References

AIA (1996).Handbook on project delivery.AIA, Sacramento, CA.

Kenig, M. (2000).Clarifying CM. vs. CM At-Risk.School Construction News (3)1, 12.

Minchin, R.E. (2009).  Fall and rise of the largest construction manager-at-risk transportation construction ever.  Journal Construction Engineering and  Management135(9), 930-938.

Minchin, R. E., Thakkar, K., and Ellis, R. D. (2007). “Chapter 3: Miami Intermodal Center—Introducing `CM-at-risk’ to transportation construction.”Alternative project delivery, procurement, and contracting methods for highways, K. R. Molenaar and G. Yakowenko, eds., American Society of Civil Engineers, Reston, Va., 46–59.

Sanvido, V., and Konchar, M. D. (1998).Project delivery systems: CM at risk, design-build, design-bid-build, Construction Industry Institute.

Transportation Research Board of National Academies (2010).Construction manager-at risk project delivery for highway programs.  Policy Paper.  Available at:  http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_syn_402.pdf.

Tulacz, G. (2002, June 17).  Owners’ risk-shifting boosts CM-at-Risk firms.  Engineering News Record. Available at:http://enr.construction.com/features/bizLabor/archives/020617d.asp 

Walewski, J., Gibson, G.E., Jasper, J. (2001). Project delivery methods and contracting  approaches available for implementation by the Texas

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