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Signature Assignment: Topic Paper, Essay Example

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Essay

Introduction

The concept of construction management at risk (hereafter referred to as “CMAR”) 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 CMAR 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 CMAR versus other commonly used project methods.  As the Transportation Research Board of the National Academies points out, there are five main advantages to CMAR.  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 CMAR 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 CMAR project delivery. CMAR’s cross-over from the private to the public sector is not complete: State laws regulating project procurement still limit CMAR’s use in different types of projects.  The prevalence of CMAR in the private versus the public sector, in addition to what sectors the project management method is useful, are key further questions to be explored.

Abridged Literature Review

This abridged literature review addresses CMAR in the private and public sector.  The references included in this abridged literature review are classified in the following categories: a) Comparative aspects of construction management; b) Methodological issues related to quantitative and qualitative aspects of the study; c) Methodological issues related to comparison.

Comparative aspects of construction management

Knocher, M. & Sanvido, V. (1998). Comparison of U.S. project delivery systems. Journal of Construction Engineering and Management, (124) 6, 435-444.

This article provides a broad-based analysis of the current types of project delivery systems used in the United States. The article provides important insight and evidence in two aspects.  First, the article points out how the evolution of construction manager at risk in the 1980s fundamentally solved a problem in the construction management market.  Up to the 1980s, the design to build and methods separated the design and construction functions.  Builders who took on the task of construction needed significant time and resources in order to understand what the plans for the building were and to prepare for construction.  Construction at risk solved a key problem in the market: The construction firm would help in designing the building as a consultant; after the plans were approved, the construction firm would switch from a consultant to the builder.

Sari, A. & El-Sayegh, S.M. (2007).  Factors affection the selection of the appropriate construction management at risk contractor.  Fifth LACCEI International Latin American and Caribbean Conference for Engineering and Technology.

In trying to understand more regarding how the construction management at risk procurement process functions, this conference article focuses on understanding different models of how construction bids are accepted.   This conference paper provides evidence that will help in answering a number of questions- most notably, the construction of how construction management at risk firms should be selected. The author introduces three different variable categories for selecting a provider: a) general factors; b) construction management factors; c) general construction factors.

Methodological Issues Related To Qualitative and Quantitative Methods

Creswell, J. W. (2003). Research design: qualitative, quantitative, and mixed methodapproaches. Thousand Oaks, Calif., Sage Publications.

While up to this point the literature review has focused on resources directly related to project management, there will also need to be general resources focusing on methodology.  The current thesis study proposes a mixed methodological approach: A qualitative study that will focus on gathering data that will then be analyzed using quantitative methods- most likely either linear or logistic regression.  This book, a mainstay in the field of qualitative research, will serve as a main resource for a number of research questions involved in the thesis.  For example, the main qualitative piece of research will (tentatively) focus on a survey of project construction managers and experts in the field. Questions related to survey design, validity of the survey results, and initial analysis of the data will depend on this book.  The book will also serve as a reference regarding the use of qualitative methods.

Marcoulides. G. (1998). Modern methods for business research.  New York: Psychology Press.

Neumann, W.L. (2010). Social research methods: qualitative and quantitative. Boston Allyn & Bacon.

These two books will serve as the main books for the understanding and documentation of quantitative methods used in analyzing data. The first book by Marcoulides focuses more on methods that are related to businesses in analyzing data.  Because the thesis study will involve the calculation of analyzing of different costs structures involved in construction projects, this book will provide the basis for analyzing that data.

Neumann’s book is important in understanding how to use quantitative methods to analyze survey data and secondary data.  This includes linear regression, as well as the use of F-Tests and other quantitative methods.

Methodological Issues Related to Comparison

Alarcon, L.F. & Mourgues, C. (2002). Performance modeling for contractor selection. Journal of Management in Engineering, 18(2), 52-60.

This article provides one of the most innovative methodological sections on how to assess the work of construction project managers. A predominant amount of attention is spent on in the literature on how to assess the prequalification bid stage for contractors.  However, models to assess the actual construction performance are few and far between.  The paper describes a number of different “strategies” for predicting how two different contractors that is relevant to the evaluation criteria in the thesis study.  First, the “conditions of interrelation” refer to how the characteristics of the owner-contractor relationship can affect project performance- the variables identified in this category include: a) contractor’s knowledge of the contract and general bases; b) contractor –technical inspection relationship; c) contractor-technical inspection relationship; d) designers’ participation.

Miller, J.B., Ibbs, C. William, & Mahoney, S.E. (2000). Toward a new paradigm: simultaneous use of multiple project delivery methods.. Journal of Management in Engineering, 16(3), 58-67.

This article, written by three professors in the field, challenges a common assumption found in the industry of construction management: Only one project management method can be used on a single project.  This paradigm of thought infuses thinking in the project sector where bidders must state upfront the project management method and how it will be used in a specific case.  The authors argue in this essay that the single delivery method is inefficient in project management, particularly in the public sector where savings could be gleaned in using different methods for procurement and building strategies. Instead, the project managers advocate an “open system” that would support multiple methods at the same time.  This point is an extremely important one for the thesis: Up to this point, the study had assumed that better outcomes may be achieved by using one project management method rather than another- the idea of a multiple method has not been examined.

Problem Statement

The problem is although CMAR is used extensively in the private sector, adaptation in the public sector has lagged, particularly due to antiquated public laws regarding procurement bids. While the problem is partly due to the existing legal infrastructure, it is also a function of a knowledge gap: State and local governments do not know in which industries CMAR provides value compared to other project management methods.

This problem is important because although the management technique has emerged as a plausible alternative in private project management, some state and local governments are researching its feasibility for public projects. The study will use a mixed quantitative-qualitative study to explore the topic: Quantitative methods will be used to establish in which industries CMAR projects are prominent; a qualitative case study approach will then be used to examine which industries are likely best served by the construction management method.

The concept of 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 (Kenig, 2000; Minchin, 2009).  This problem is 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 (Minchin, 2009; Walewski, Gibson, & Jasper, 2001).

Purpose Statement

The purpose of this study is two-fold: 1) To assess the current use of construction at management project management in the public and private sector versus other project management techniques; 2) To provide a more granular analysis of industries where construction at risk has proven effective and attempt to understand its success. In order to fulfill this dual purpose, the proposed study type is mixed in nature, including quantitative and qualitative components.  The quantitative section of the analysis will focus on statistical and regression analysis; the purpose of the analysis is to determine a baseline of project management types and their frequency of use in the public and private sector.  The qualitative section of the analysis will focus on case studies related to construction-at risk-projects undertaken in various sectors.  The objective of the qualitative section of the study is to supplement and augment the quantitative analysis through exploring finished construction-at-risk projects and identifying variables related to success and failure.

Research Questions

The study will address three main research questions.  First, the study will look at the uptake of construction at-risk management versus other traditionally used project management methods. This question, although seemingly simple, is important for two reasons. The basic statistical analysis will serve as the foundation for further analysis in attempting to understand why construction at risk management is used in certain industries, as well as understand where it is not used.  There is also a gaping lacuna in aggregating project management statistics in one place- although statistics may exist in many different places, practitioners and scholars alike tend to focus on specific topics rather than starting out with a foundational analysis.  A broad statistical analysis of current project management use will thus be a key contribution to the scholarly debate.

Second, the study aims to compare in a private/public sector context construction at management is prevalently used and which ones it is not.  This question, although related to first, explores and attempts to break down the statistics into separate industries.  This question is important in understanding where construction at management is used in the private sector versus where it used in the public sector.  The dissonance in use between the two sectors will not only be informative to see which governments (state and local) allow the use of project management bidding, but also to explore if the project management method is used in certain private sector projects in an industry that is not currently used in the public sector industry.  This question is of intense importance to industry practitioners and policy makers alike.  For industry practitioners, many are pushing state and local governments to accept construction manager at risk projects for procurement bids.  Government policy makers, however, want to understand the advantages and disadvantages associated with the method vis-à-vis traditionally used methods.

Finally, the last research question will attempt to drill down and ask the question: what has made construction at risk projects successful?  The main methodology used to answer this question will include case studies from already completed projects and interviews with practitioners in the field.  The study will examine a number of projects in detail to identify key variable that made finished projects “successful.”  The study will then use the analytical process of induction to assess whether these variables can be generalized to other projects.  This research is highly relevant to the question of what makes construction at risk project management different from traditionally used methods.  It also addresses why that may or may not be the case through looking at completed projects and speaking to practitioners in the field.  There is not currently a similar study in the field that addresses this question using robust qualitative methods.

Summary

The emergence of CMAR in project management has resulted in new thinking regarding project management.  Although CMAR is used extensively in private tendering, due to a number of reasons, it has not commonly used in the public sector.  This thesis study will take a look at why that is the case and in what instances CMAR has been most efficient.

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 department of transportation.  Texas Department of Transportation.

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