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Idea Transcript


The Islamic University – Gaza

‫انجايؼت اإلسالييت – غزة‬ ‫كهيت انهُذست‬

Faculty of Engineering

‫ػًادة انذراساث انؼهيا‬

Higher Education Deanship Construction Project Management

‫إدارة انًشاريغ انهُذسيت‬

FACTORS AFFECTING THE SELECTION OF PROCUREMENT METHODS IN THE CONSTRUCTION PROJECTS IN GAZA STRIP ‫انؼىايم انًؤثرة في اختيار طريقت انشراء في يشاريغ اإلَشاءاث في قطاع غزة‬

Partial fulfillment of the requirement for the degree of Master of Science in Civil Engineering

Prepared by Osama I. El Agha

Supervised by Dr. Nabil El Sawalhi Thesis is submitted in partial fulfillment of the requirement for Degree of Master of Science in Civil Engineering – Construction Management

The Islamic University of Gaza December, 2013

‫انمِ انرحى ـٌ انرحيــو‬ ‫بسو ـ‬ ‫ـ‬ ‫وَأَ َْزَلَ انهَُّ ػَهَيْكَ انْكِتَابَ وَانْحِكًَْتَ وَػَهًََكَ يَانَىْ تَكٍُْ تَؼْهَىُ وَكَاٌَ‬ ‫َفضْمُ انهَِّ ػَهَيْكَ ػَظِيًًا‬ ‫سٕسج انُساء ‪ -‬ا‪ٜٚ‬ح ‪113‬‬

‫انؼظيو‬ ‫ـ‬ ‫صذق اهلل‬

‫‪I‬‬

DEDICATION This thesis is dedicated To my parents for their unlimited support. To my wife for her continuous encouragement. To my daughters (Mai and Mayar) who were missing my direct care during my study. To all of my family, colleagues and friends for their help and support. To those who give of themselves so that others may live.

Osama El Agha

II

ACKNOWLEDGEMENT 

Iam grateful to my supervisor Dr. Nabil El Sawalhi for his professional advice, useful guidance, and excellent support through all stages of preparing this thesis. Dr El Sawalhi careful check and useful response have made a great contribution to the production of this thesis in its final form.



Appreciation is also expressed to construction management teaching staff at the Islamic University for their support and encouragement.



Many thanks to Dr. Samir Saffi for his support in analyzing the study survey data.



Kind gratitude and sincere acknowledgment to Engineering consultancy offices, NGO‟s, government agencies, international agencies, municipalities in the Gaza Strip who participated in filling out the questionnaires and provided valuable information for this study.



Finally, I must express my sincere thanks to all those people who made this thesis possible and an enjoyable experience for me.

III

Abstract The selection of an appropriate procurement method is becoming an increasingly important issue due to a complex decision-making that has to be made by clients early in the project lifecycle. The aim of this research is to improve and enhance procurement system in the Gaza Strip construction industry through identify, evaluate and rank essential the factors that affect the selection of traditional and the non-traditional procurement methods from procurement experts and consultants‟ perspectives. An extensive literature review of various procurement methods and factors which influence the selection of an appropriate method for construction projects in Gaza Strip was conducted. A survey questionnaire was carried out to elicit professionals' views on factors that influence the selection of procurement method for their planned projects; a total of 68 organizations (i.e. 29 procurement experts and 39 consultants operating in Gaza Strip, Palestine) responded to the survey. The data was then analyzed using the Statistical Package for Social Sciences (SPSS) and the factors ranked according to their Relative Importance Index (RII). The results indicate that the top six significant factors that have most influence on the selection of procurement methods in the Gaza Strip in construction projects are: price competition; degree of project complexity; time constrains of project; project size; client's financial capability and client's experience in procurement methods. This research concludes that there is no variety of procurement methods used in the Gaza Strip construction industry where a traditional procurement method with a measure and pay method based on bill of quantities is preferred. This is because of the most of professionals' in Gaza Strip are not familiar and not widely experienced with the other alternative procurement methods. One of the main recommendations of this research is to use the proposed conceptual framework using the multi-attribute utility approach (MAUA) as a decision support system for the selection of appropriate procurement method for construction projects in the Gaza Strip.

IV

‫يهخص انبحث‬ ‫أطثذد ػًه‪ٛ‬ح اخر‪ٛ‬اس طش‪ٚ‬قح انششاء انًثهٗ ف‪ ٙ‬يشاس‪ٚ‬غ انرش‪ٛٛ‬ذ قض‪ٛ‬ح راخ أًْ‪ٛ‬ح تانغح ٔرنك َظشاً نظؼٕتح ػًه‪ٛ‬ح‬ ‫اذخار انقشاس يٍ طشف انًانك أٔ و ٌ ‪ُٕٚ‬ب ػُّ ف‪ٔ ٙ‬قد يثكش يٍ دٔسج د‪ٛ‬اج انًششٔع‪ٔ ،‬د‪ٛ‬ث أٌ طُغ انقشاس‬ ‫تاذخار انطش‪ٚ‬قح انًالئًح نهششاء نّ ذأث‪ٛ‬ش كث‪ٛ‬ش ػهٗ َجاح انًششٔع فئٌ ْزا انثذث ‪ٓٚ‬ذف إنٗ ذذس‪ٔ ٍٛ‬ذؼز‪ٚ‬ز َظاو‬ ‫انًشرش‪ٚ‬اخ ف‪ ٙ‬طُاػح انرش‪ٛٛ‬ذ ف‪ ٙ‬قطاع غزج يٍ خالل ذذذ‪ٚ‬ذ ٔذق‪ٛٛ‬ى ٔذشذ‪ٛ‬ة انؼٕايم انر‪ ٙ‬ذؤثش ف‪ ٙ‬ار ذ‪ٛ‬اس طش‪ٚ‬قح‬ ‫انششاء يٍ خالل ذقظ‪ ٙ‬أساء االسرشاس‪ٔ ٍٛٚ‬خثشاء انًشرش‪ٚ‬اخ ‪.‬‬ ‫نقذ ذى اسرؼشاع انؼذ‪ٚ‬ذ يٍ انذساساخ انساتقح نطشق انششاء انًخرهفح ٔانؼٕايم انر‪ ٙ‬ذؤثش ف‪ ٙ‬اخر‪ٛ‬اس طش‪ٚ‬قح انششاء‬ ‫انًثهٗ نًشاس‪ٚ‬غ اإلَشاءاخ ف‪ ٙ‬قطاع غزج‪ٔ ،‬ذى اسرخذاو اسرث‪ٛ‬اٌ كأداج نرٕض‪ٛ‬خ أداء انًُٓ‪ ٍٛٛ‬ألْى انؼٕايم انر‪ ٙ‬ذؤثش‬ ‫ف‪ ٙ‬ػًه‪ٛ‬ح اخر‪ٛ‬اس طش‪ٚ‬قح انششاء ف‪ ٙ‬يشاس‪ٚ‬غ انرش‪ٛٛ‬ذ‪ ،‬د‪ٛ‬ث ذى ػًم يسخ نؼذد ثًاَ‪ٛ‬ح ٔسرٌٕ يُظًح ػايهح ف‪ ٙ‬قطاع‬ ‫غزج (ذسؼح ٔثالثٌٕ اسرشاس٘ يًثالً ػٍ انًكاذة االسرشاس‪ٚ‬ح انُٓذس‪ٛ‬ح‪ٔ ،‬ذسؼح ٔ ػششٌٔ خث‪ٛ‬ش يشرش‪ٚ‬اخ يًثالً ػٍ‬ ‫انًؤسساخ انًانكح نهًشاس‪ٚ‬غ ) ٔقذ ذى ذذه‪ٛ‬م انث‪ٛ‬اَاخ اإلدظائ‪ٛ‬ح نالسرث‪ٛ‬اٌ تاسرخذاو تشَايج‬

‫(‪ٔ )SPSS‬ذى ق‪ٛ‬اس‬

‫دسجح أًْ‪ٛ‬ح انؼٕايم انًؤثشج ف‪ ٙ‬اخر‪ٛ‬اس طش‪ٚ‬قح انششاء ٔذشذ‪ٛ‬ثٓا ٔفقاً نًؤشش األًْ‪ٛ‬ح انُسث‪ٛ‬ح (‪. )RII‬‬ ‫ٔذش‪ٛ‬ش انُرائج إنٗ أٌ أْى انؼٕايم انر‪ ٙ‬نٓا انرأث‪ٛ‬ش األكثش ف‪ ٙ‬اخر‪ٛ‬اس طش‪ٚ‬قح انششاء ف‪ ٙ‬قطاع غزج ف‪ ٙ‬يشاس‪ٚ‬غ انرش‪ٛٛ‬ذ‬ ‫ْ‪ :ٙ‬انًُافسح ػهٗ انسؼش‪ ،‬دسجح ذؼق‪ٛ‬ذ انًششٔع‪ ،‬يذذداخ ٔقد اَرٓاء انًششٔع‪ ،‬دجى انًششٔع‪ ،‬انقذسج انًان‪ٛ‬ح‬ ‫نهًانك‪ ،‬خثشج انًانك ف‪ ٙ‬يؼشفح طشق انششاء‪ ،‬ذٕفش طاقى يؤْم ف‪ ٙ‬انًشرش‪ٚ‬اخ‪ ،‬ذجُة انًخاطش‪َٕ ،‬ع ٔطث‪ٛ‬ؼح‬ ‫انًششٔع ‪ ،‬ذٕفش أَظًح انششاء انًخرهفح ف‪ ٙ‬انسٕق انًذه‪.ٙ‬‬ ‫تاإلضافح إنٗ رنك ‪ٚ‬خهض ْزا انثذث نؼذو ٔجٕد ذُٕع ف‪ ٙ‬طشق ٔإَٔاع انششاء انًسرخذيح ف‪ ٙ‬طُاػح اإلَشاءاخ‬ ‫ٔانرش‪ٛٛ‬ذ ف‪ ٙ‬قطاع غزج‪ ،‬د‪ٛ‬ث ‪ٚ‬فضم األغهة اخر‪ٛ‬اس طش‪ٚ‬قح انششاء انرقه‪ٛ‬ذ‪ٚ‬ح تاسرخذاو طش‪ٚ‬قح "جذٔل انكً‪ٛ‬اخ" ٔرنك‬ ‫تسثة ػذو خك‪ٛ‬ف خثشاء انًشرش‪ٚ‬اخ ػهٗ انطشق األ خشٖ نهششاء ف‪ ٙ‬قطاع غزج ٔػذو ذٕفش انخثشج انكاف‪ٛ‬ح نذ‪ٓٚ‬ى‬ ‫نهرؼايم يغ ْزِ انطشق انثذ‪ٚ‬هح‪.‬‬ ‫ذٕط‪ْ ٙ‬زِ انذساسح إنٗ اسرخذاو إطاس انؼًم انًقرشح نًؼشفح يا إرا كاَد طش‪ٚ‬قح انششاء انر‪ٚ ٙ‬رى اخر‪ٛ‬اسْا ٔانخاطح‬ ‫تًششٔع يا ْ‪ ٙ‬يجذ‪ٚ‬ح أو ال يٍ انُاد‪ٛ‬ح انفُ‪ٛ‬ح‪ ،‬كًا ٔذٕط‪ْ ٙ‬زِ انذساسح أ‪ٚ‬ضاً تٕجٕب يؼشفح يذساء انًشرش‪ٚ‬اخ ف‪ٙ‬‬ ‫انًؤسساخ انًخرهفح ٔاالسرشاس‪ ٍٛٚ‬ػهٗ طشق انششاء انًخرهفح ٔذشج‪ٛ‬ؼٓى ػهٗ دساسح ٔفٓى طشق انششاء انثذ‪ٚ‬هح قتم‬ ‫اذخار انقشاس انخاص تطش‪ٚ‬قح انششاء انًسرخذيح ف‪ ٙ‬انًشاس‪ٚ‬غ انُٓذس‪ٛ‬ح‪.‬‬

‫‪V‬‬

Table of contents Dedication …………………………………………………………………….... Acknowledgement ……………………………………………………………...

II III

Abstract …………………………………………………………………………

IV

‫……………………………………………………………………… يهخص انبحث‬.

V

Table of contents ………………………………………………………..……...

VI

List of abbreviations …………………………………………………..……….

X

List of Tables …..………………………………………………………………..

XI

List of figures ……………………………………………………………..…….

XIII

Chapter 1: Introduction …………………………………….…………..……..

1

1.1 Introduction …………………………..…………….……………………………….

1

1.2 Importance of the research …………….…………………………………………....

3

1.3 Research aim ………….…………………...………………………………..............

3

1.4 Research objectives ………………………..………………………………………..

3

1.5 Statement of the problem …………………….………….………………………….

4

1.6 Research limitations …………………………..…………………………………….

4

1.7 Thesis structure ……………………………………………………………………..

5

Chapter 2: Literature review ………………………………………………….

6

2.1 Definitions of procurement method …………………………………………………

6

2.2 Background for procurement methods history ………………………………………

6

2.3 Issues for future procurement ………………………………………………………..

9

2.4 Types of procurement methods ……………………………………………………..

10

2.4.1 Traditional procurement method (Separated) ……………………………

11

2.4.1.1 Lump sum contract method ……………………………………

13

2.4.1.2 Measurement contract method ………………………………..

14

2.4.1.3 Cost reimbursement contract method …………………………

15

2.4.1.4 Key points for traditional procurement method ……………....

17

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

CHAPTER 3: Reasearch methodology ………….……..……………………..….…...

47

3.1 Introduction ………….……………………………………………………………..

48

3.2 Research design ……………………………………………………………..………

48

3.3 Interview ………………………………..…………………………………………..

49

3.4 Developing the questionnaire ………………….…………………………………...

50

3.5 Statistical analysis tools ………………..…………………………………………...

51

3.6 Methodology for this research ……………..……………………………………….

52

3.6.1 Study and investigate the major practices of variant types of procurement methods used in Gaza Strip construction industry ………....…………….

52

3.6.2 Identify and rank the factors affecting the selection of procurement method……………………………..……………..………………………

52

3.6.3 Build a framework for the selection of procurement method in Gaza Strip

55

3.7 Pilot study ………..………..………………………………………………………...

55

3.8 Instrument validity ………………..………………………………………………...

56

3.8.1 Validity test ……………………………………………………………....

57

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

CHAPTER 4: Results and discussion ……………………………….…..…………...

66

4.1 Introduction …………………….…………………………………………………...

66

4.2 Organizational profiles …………………..………………………………………….

66

4.2.1 Position of respondent ……………………………………….…………...

66

4.2.2 Experience years of the respondents ………………………………..…….

67

4.2.3 Qualification of the respondents ………………..………………………...

67

4.2.4 Type of institution ………………...………………………………………

68

4.2.5 Type of projects the organizations are dealing with ………………..…….

68

4.2.6 Value of projects executed in the last five years …………...……………..

69

4.3 Factors affecting the selection of procurement method ………….………..…...........

69

4.3.1 Main factor groups affecting the selection of procurement method ……...

69

4.3.2 The relationship among the selection of procurement method groups..….

72

4.4 Sub-factors affecting the selection of procurement method ……………..…...……...

73

4.4.1 Group one: Sub-factors related to client ……………..…………………...

73

4.4.2 Group two: Sub-factors related to cost ………………..………………….

74

4.4.3 Group three: Sub-factors related to time ……………………..…………..

75

4.4.4 Group four: Sub-factors related to risk ………..…………………………

76

4.4.5 Group five: Sub-factors related to project characteristics ……………..…

77

4.4.6 Group six: Sub-factors related to external environment ……..…………...

78

4.4.7 Ranking of sub-factors affecting the selection of procurement method in the Gaza Strip …………...……….……………………………………….

80

4.5 Perspective about procurement methods used in Gaza Strip ……………………….

86

4.5.1 The satisfaction about procurement system of different organizations ..…

86

4.5.2 The most common procurement method selected by organizations ..…….

87

7

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

CHAPTER 5: Develping a framework ……………………………………………….

91

5.1 Introduction …………………………………………………………………………

91

5.2 Multi-attribute utility approach (MAUA) ………………………………………….

91

5.3 Data collection procedure …………………………………………………………..

92

5.4 Data analysis ………………………………………………………………………..

93

5.5 Multi-attribute utility approach application ……………………………………….

95

5.6 Multi-attribute utility approach verification ……………………………………….

95

5.6.1 Verification cases ……………………………………………………….

95

5.6.1.1 Case 1: Desgin and build of Wadi Gaza wastewater

96

treatment plant …………………………………………… 5.6.1.2 Case 2: Construction of continuous medical education

99

centre at the Islamic University ………………………….. 5.7 A framework development ………………………………………………………….

102

CHAPTER 6: Conclusion and Recommendations ………………………...…………

105

6.1 Introduction ………………………..…………………………………………….....

105

6.2 Conclusion ………………………………...………………..………………………

105

6.3 Recommendations ………………………………..…………………………………

108

6.4 Recommendations for future research ……………………………………..……….

109

References …………………………………….………………………………………

110

Annex (1): Questionnaire (English) …………..……………………………………..

116

IX

List of Abbreviations

BOQ

Bill of Quantity

BOT

Build-Operate-Transfer

BPF

British Property Federation

CIOB

The Chartered Institute of Building

CM

Construction Management

CM/GC

Construction Manager/General Contractor

CMWU

Coastal Municipalities Water Utility

CPARs

Country Procurement Assessment Report

DB

Design-Build

DBB

Design-Bid-Build

ICB

International Competitive Bidding

MAUA

Multi-Atribute Utility Approach

NCB

National Competitive Bidding

NGOs

Non-Government Organizations

NS

National Shopping

PPP

Public Private Partnership

PPPP

Public Private Partnership Procurement Method

RFP

Request for Proposal

RFQ

Request for Qualification

RII

Relative Importance Index

SPSS

Statistical Package for the Social Sciences

UAE

United Arab Emirates

UK

United Kingdom

WB

World Bank

X

List of Tables Table 2.1:

WB Project cost by procurement method ….……………………………

42

Table 2.2:

Factors influencing the selection of procurement method…….…………

44

Table 3.1:

Participants attended interview………………………….……………….

49

Table 3.2:

Factors affecting the selection of procurement method………………….

53

Table 3.3:

Correlation coefficient of each paragraph of factors related to client and the total of this factor ………………………….………………………...

Table 3.4:

Correlation coefficient of each paragraph of factors related to cost and the total of this factor ………………………………………...………….

Table 3.5:

58

Correlation coefficient of each paragraph of factors related to project characteristics and the total of this factor……………..………………….

Table 3.8:

58

Correlation coefficient of each paragraph factors related to risk and the total of this factor ……………………………………...………………...

Table 3.7:

58

Correlation coefficient of each paragraph of factors related to time and the total of this factor ……………………………...…………………….

Table 3.6:

58

59

Correlation coefficient of each paragraph of factors related to external environment and the total of this factor…………………………………

59

Table 3.9:

Correlation coefficient of each field and the whole of questionnaire……

60

Table 3.10:

Reliability coefficient for the questionnaire…………………..………….

62

Table 3.11:

Percentages of received questionnaires………………………..………....

63

Table 3.12:

Frequency of job title of the respondents…………………………..…….

64

Table 3.13:

Ordinal scale used for data measurement…………………..…………….

64

Table 4.1:

Frequency and percent of position of the respondents……………..…….

66

Table 4.2:

Experience years of respondents……………………..…………………..

67

Table 4.3:

Qualification of respondents……………….………………………….....

67

Table 4.4:

Type of institutions……………………..………………………………...

68

Table 4.5:

Type of projects the organizations are dealing with……………..………

68

Table 4.6:

Value of implemented projects during the last five years………..………

69

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

Table 4.18:

The satisfaction percentages of procurement system………..…………...

86

Table 4.19:

The percentages of common procurement methods selected by organizations……………………………………………………………..

Table 4.20:

87

The percentages of common type of traditional procurement method selected by organizations…………………...…………………………....

87

Table 4.21:

The percentages of procurement method familiarity………………..…...

88

Table 4.22:

The percentages of procurement method types would like be used more in Gaza……………………………………………………………………

Table 4.23:

89

The degree of agreement on using a model for procurement method selection…………………………………………………………………..

90

Table 5.1

Rationalized priority rating by respondents

94

Table 5.2

The average benchmark performance values (Case 1)

97

Table 5.3

The weighted sum model results (Case 1)

98

Table 5.4

The average benchmark performance values (Case 2)

100

Table 5.5

The weighted sum model results (Case 2)

101

XII

List of Figures

Figure 2.1:

Procurement method characteristics………………………………….

11

Figure 2.2:

Traditional procurement method……………………………..………

12

Figure 2.3:

Selection Methodology Continuum………………..……….………..

19

Figure 2.4:

Pre and Post-Novation Contracts…………………..….……………..

21

Figure 2.5:

Construction Management Procurement Method……………............

29

Figure 2.6:

Risk apportionment between client and contractor…………………..

40

Figure 3.1:

Research methodology flowchart…………………………………….

48

Figure 5.1:

Framework for the selection of procurement method ……………….

104

XIII

CHAPTER 1 INTRODUCTION 1.1 Introduction Procurement methods for construction industry can be defined as the organizational structure adopted by client for the management of the design and construction of a building project (Masterman, 2002). However, procurement methods define the management, functional and contractual arrangement and relationship amongst project team. Different procurement methods are used for different construction projects and the correct choice may help to avoid problems and be the key to the attainment of project specific goals (Eyitope et al., 2012). The selection of an appropriate procurement method can reduce construction project costs by an average of 5%. While an appropriate procurement system may enhance the probability of project success (Naoum, 1994; Luu et al., 2003). A wrong procurement method often leads to project failure or client's dissatisfaction (Love et al., 1998). The selection of procurement system therefore becomes a very important task for clients, as employing an inappropriate procurement system may leads to project failure (Chua et al., 1999). Clients have the responsibility to select the most appropriate procurement method for their construction projects. This has become imperative because the client is faced with various options to procure his project (Okunlola, 2012). Selecting an appropriate project procurement method is a complex decision-making process due to risks and uncertainties. Moreover, it depends largely on the accurate identification of client requirements. At the time of the decision, the clients and stakeholders often have little information and the project plans are not detailed enough to make a judgment about the project with certainty of outcomes (Daniel, 2012). The decision to select the appropriate procurement method to implement a construction project is crucial. Though it does not necessary lead to a successful project but with other factors taken into consideration can influence the success of the project (Okunlola and Olugbenga, 2010). The use of alternative procurement methods has increased recently due to many factors including the increase in complexity and size of projects, increased owner sophistication and requirements, demand for shorter delivery period and others. However, the decision is not easy as there are many factors that affect

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.

1.3 Research aim This research aims to improve and enhance procurement system in the Gaza Strip through support the clients and consultants in the selection process of an appropriate procurement method for their construction projects.

1.4 Research objectives The main objectives of this study are summarized as the following: 1. To study and investigate the major practices of variant types of procurement methods used in Gaza construction industry.

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. 4. To evaluate the degree of agreement/disagreement between procurement specialists and consultants regarding the ranking of siginificant key factors. 5. To develop a framework for the selection of procurement method in Gaza Strip.

1.5 Statement of the problem Many clients have been selecting procurement systems in a cursory manner, and some clients even use a specific procurement system by default without making a deliberate choice. A recent UK study showed that 89% of respondents were dissatisfied with the procurement system they had previously employed. Inexperienced clients often have to rely on expert advice when selecting a procurement approach and this could result in inappropriate decisions with unforeseeable consequences. Experienced clients may also suffer if they simply based their selection upon biased past experience and the conservative decisions of their in-house experts or consultants. The selection of an appropriate procurement system is one of the most important problem in the construction sector. The need for selecting and using an appropriate procurement system for a particular construction project, together with the proliferation of differing procurement systems, calls for more systematic methods of selection. To do this, decision criteria and factors pertinent to the selection of procurement approaches and their properties (i.e. subjectivity) must be carefully identified, evaluated, and examined their effects on procurement method selection to overcome this problem.

1.6 Research limitations This thesis is restricted by the following limitations 1. Due to time limitation, this study is concerned with major procurement methods for construction works only, and will not take into account the other procurement methods for goods and consultancy services. 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.

1.7 Thesis structure This research consists of six main chapters as followings 

Chapter one: Introduction: this chapter shows the main objectives of research, statement of the problem and limitations of research;



Chapter two: Literature review: this chapter shows a historical review from previous studied to identify the main factors influencing the selection of procurement system in construction projects;



Chapter three: Methodology: this chapter shows the main methodologies used in previous studies and the methodology used in this research in order to achieve the required objectives;



Chapter four: Results analysis: this chapter shows analysis, description and discussion of research results;



Chapter five: Developing a framework: this chapter shows multi- attribute utility approach, data collection, data analysis, multi- attribute utility approach application and vertification and framework design.



Chapter six: Conclusion and recommendations.



Appendix.

5

CHAPTER 2 LITERATURE REVIEW 2.1 Definitions of procurement method Since this research mainly relies on investigating the key factors influencing the selection of procurement methods, it was necessary to establish the definitions of the procurement method. Mathonsi and Thwala (2012) stated that „Procurement method‟ is a contemporary term, which is known to many practitioners and researchers of the construction industry by different terms; these include terms such as project approach, procurement systems, procurement

delivery

methods

or

project

delivery

systems, etc. Masterman (2002) argues that there is a need to accept that contemporary procurement methods can now embrace not only design and construction,

but

also

financing, operating,

facilities

management

etc.

The

following definitions best define a procurement method 

It is an organizational structure adopted by the client for the implementation and at times eventual operation of a project,



It is a key means through which the clients create the pre-conditions for the successful achievement of project-specific objectives,



A procurement method (or sometimes known as procurement system) “is an organizational system that assigns specific responsibilities and authorities to people and organizations, and defines the various elements in the construction of a project”.

2.2 Background for procurement methods history Larmour (2011) stated that procurement methods remained relatively unchanged for over hundred years prior to the Second World War, with the main forms being traditional or conventional methods. Post 1945 many newer forms of procurement emerged and the use of different procurement methods changed over time. The rise and fall of the economy during the next fifty years has seen a number of different

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 

Phase 1: 1945 - 1972 – Sustained economic growth

By the 1950‟s negotiated tenders and Design and Build had begun to be used in a very limited scale by the private sector in developed countries. The Emmerson Report (Ministry of Works in UK, 1962) criticized the lack of cooperation between members of the project team and their clients, notably highlighting „in no other important industry is the responsibility for design so far removed from the responsibility for production. This period was still a general failure to adopt alternative methods of tendering. The early to mid 1960‟s was a time of economic expansion, rapidly developing technology, changing social attitudes, demand for more complex and sophisticated buildings, and the increased need from clients for faster completion at minimum cost.

These

consequence

factors of

generated considerable

which

was

that

the

activity

within

the

industry,

a

general standard of performance and

organization improved. (Masterman, 2002). In summary, this was a time of economic growth, with general use of conventional procurement methods, and only a small use of non-conventional procurement methods. 

Phase 2: 1973 - 1980 – Recession

This was a period of recession due to the unexpected and large price increases in crude oil, coupled with high inflation caused by the previous economic boom. Governments sponsored studies during this period tended to be specific to individual sectors.

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

1970‟s

reports

reflected

conservatism, as a diminishing number of clients were prepared to commit to projects in an uncertain economic climate. 

Phase 3: 1981 - 1990 – Post recession recovery

This was a period of post recession adjustment and recovery. Changes such as labour only sub-contracting emerged due to long term shifts in the structure of the industry. For example, the British Property Federation (BPF) launched a new procurement system „System for Building Design and Construction‟ in 1983. Natasa (2007) stated that prior to the mid-1980s the mainstream of the construction industry in developed countries has followed traditional methods of procurement. One consequence of the above has been the global development of new, alternative procurement methods, which can be categorized, by the way in which the interaction between the design and construction of the project is managed, to integrated procurement systems, management-oriented procurement systems and, in more recent times, partnering. 

Phase 4: 1991 - 2000 – Recession and recovery

The early part of this decade saw low economic growth, uncertainty in business and finance, social pressures and environmental issues emerge. In addition to government capital spending cuts, there was little enthusiasm for major projects in the private sector. The results were a major downturn in the construction industry with more than 500,000 construction related jobs lost, and more than 16,000 construction companies becoming insolvent (Cox, et al., 1998). In 1997, there were signs of recovery, but annual input was still 20% below 1990

levels. A number of problems to be tackled including the client‟s role,

management of the project process, fragmentation of the industry, competitive tendering, the reputation of the industry and barriers to attracting the best people. 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 1980‟s. There was also an increase in the use of partnerships and alliances. 

Phase 5: Sustained economic growth, followed by recession (2000-2010)

This decade saw continued growth with major projects constructed in the first half of the decade. The financial crisis towards the latter part of the decade resulted in recession from June 2008 – Dec 2009, the longest recession since the 1950‟s. During this decade, the growth period saw an increase in the use of construction management for large scale projects, and an increase in the use of design and build. This may partly be due to the requirement to bring new buildings to the market in very short timescales. Larmour (2011) argues that the impact of the recession in the last few years of this phase is difficult to determine at present, however it appears to have caused an increase in use of design and build procurement method, and a more competitive market for consultant fees. The results of this are likely to be felt over the next few years in various parts of the construction industry. Larmour (2011) stated that this decade also saw a shift in the procurement method for public sector projects. The increased use of private finance to fund public projects, and a desire to meet the partnering.

2.3 Issues for future procurement Larmour (2011) stated that one of the impacts of the move away from traditional contracts is the increasing fragmentation of the industry. It has become more common for certain packages to be sub-contractor designed, resulting in a loss of skills within consultant practices. The fragmentation of the industry whilst enabling the development of specialist teams may preclude the use of some procurement systems in the future and may be detrimental to some projects. When choosing a procurement method, many factors must be considered depending on the type of client, development and mechanisms for funding the project. At the outset, before a procurement method is chosen, it is important that the client develops a project strategy. This would include factors such as identifying the 9

objectives for the project, completion of a risk management process, relevance of timescale, degree of quality expected, and appropriate team structure.

2.4 Types of procurement methods Davis et al., (2008) stated that a plethora of methods for procuring construction projects are available to meet the needs of clients. Deciding what method to use for a given project is a difficult and challenging task as a client‟s objectives and priorities need to marry with the selected method so as to improve the likelihood of the project being procured successfully. The decision as to what procurement method to use should be made as early as possible and underpinned by the client‟s business case for the project. The risks and how they can potentially affect the client‟s business should also be considered. Davis et al., (2008) classified procurement systems as the following two major methods 1. Traditional Procurement Method (Separated); 2. Non-Traditional Procurement Method which include the following three methods A. Design and Construct Procurement Method (Integrated); B. Management Procurement Method (Packaged); and C. Public Private Partnership Procurement Method Mathonsi and Thwala, (2012) stated that over the past number of years, the construction industry has undergone changes in a manner never seen before. The increased size and complexity of the construction projects, financial challenges, political and social consideration, and information technology are just some of the changes that have been taking place. These changes had led to the development of alternative procurement systems other than the famous traditional one. Although the development of non-traditional procurement systems seemed to be the favorite to most clients of the construction industry, It must, however, be emphasized that there is not yet a specific method used to select the most appropriate procurement method. Natasa (2007) stated that many clients today, however, are increasingly dissatisfied with the traditional approach and its operational characteristics and actively seek 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.

Traditional

Management Contracting

Construction Management

Design and Build

Build Operate Transfer

Increasing integration of design and construction Professional

Construction Management

Contractual

Management Contracting

Design and Manage

Design, Manage and Construct

Figure 2.1: Procurement method characteristics, source: Rowlinson et al., (1999)

2.4.1 Traditional procurement method (Separated) Mathonsi and Thwala, (2012) stated that this method is called „traditional‟ because it has been in existence for a long time and has been the only choice available for most clients of the construction industry for many years. Using this method, the client enters into an agreement with the design consultant (an architect or engineer) to actually carry out the design work and prepare contract documents. Following the completion of this phase, the contractor is then appointed based upon the owner‟s criteria and the owner enters into a contract with the successful contractor for the assembly of the project elements. In essence, the client is under two contractual obligations; the design professional and the contractor. Larmour (2011) argues that this method is used to describe procurement which involves the client‟s design team producing a full construction design. The contractor will then tender for the construction of this package. Traditional procurement 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.

Figure 2.2: Traditional procurement method, source: Davis et al., (2008)

The Chartered Institute of Building CIOB report, (2010) illustrated that traditional method, has its weaknesses, as all other methods of procurement do. However, the construction industry has used the traditional process for so long that it has become the most understood. Indeed, it is likely that the simplicity involved in understanding traditional is its greatest strength – the designer is responsible for design and the contractor for execution, so responsibility for co-ordination of subcontract packages lies firmly with the contractor. While complications will inevitably arise, as with any procurement system, the traditional method sees each party knowing where they stand, and who has responsibility for what. Weaknesses with traditional are, however,

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.

2.4.1.1 Lump sum contract method Davis et al., (2008) stated that the contractor undertakes to carry out a defined amount of work in return for an agreed sum. This can be a fixed amount not subject to recalculation, in which case there would be no opportunity for the employer to make variations. The sum is likely to be subject to limited fluctuations, usually to cover tax etc changes not foreseeable at the time of tendering. The sum may be subject to fluctuations in the cost of labour, plant and materials – the so called fluctuations provision. Recovery may be use of a formula, or by checking invoices. El Wardani (2004) stated that lump sum contracts with quantities are priced on the basis of drawings and a firm bill of quantities. Items which cannot be accurately quantified can be recovered by an approximate quantity or a provisional sum, but these should be kept to a minimum. Lump sum contracts „without quantities‟ are priced on the basis of drawings and another document. This may simply be a specification of a descriptive kind, in which case the lump sum will not be itemized, or one that is detailed to the extent that the contract sum is the total of the priceable items. The job might be more satisfactory described as a 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).

2.4.1.2 Measurement contract method Davis et al., (2008) argues that measurement contracts are also referred to as „remeasurement 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 multipurpose document. Although measurement and their

preparation is very synonymous with

quantity

surveyors, are also prepared by contractors such as in Taiwan and Thailand and by architect and engineers such as in Germany, France, Spain, Russia, Bulgaria, Hungary and Rumania. In countries like Malaysia, Brunei, Australia, New Zealand and most of the African and Middle Eastern countries, are prepared mainly by consultant quantity surveyors. Traditionally, the preparation of BOQ is considered as the „bread and butter‟ of a consultant quantity surveyor‟s profession (RICS, 1984 cited in Davis & Baccarini, 2004).

2.4.1.3 Cost reimbursement contract method Davis et al., (2008) illustrated that this type of contract sometimes referred to as „Cost Plus‟ contracts. The contractor undertakes to carry out an indeterminate amount of work 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 •

Cost-plus percentage fee The fee charged is directly related to the prime cost. It is usually a flat rate percentage, but it can also be on a sliding scale. However, the contractor has no real incentive to work at maximum efficiency, and this variant is only likely to be considered where the requirements are particularly indeterminate precontract.



Cost-plus fixed fee The fee to be charged is tendered by the contractor. This is appropriate provided that the amount and type of work is largely foreseeable. The contractor has an incentive to work efficiently so as to remain within the agreed fee.



Cost-plus fluctuating fee The fee varies in proportion to the difference between the estimated cost and the actual prime cost. The assumption is that as the latter cost increases, the contractor‟s supposed inefficiency will result in a fee which decreases. This approach depends upon there being a realistic chance of ascertaining the amount and type of work at tender stage.

Mathonsi and Thwala, (2012) stated that in order for the client to obtain a constructed facility, tenders from traditional procurement method are invited in one of the three following methods •

Open tendering This is a procedure that allows practically any contractor to submit a tender for the work. This procedure involve either the client or consultant (on behalf of the client) placing a public advertisement giving a brief description of the work. Normally the client will require a cash deposit when contract documents are requested (Pilcher, 1992).

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.

2.4.1.4 Key points for traditional procurement method •

A traditional lump sum contract requires the production of a complete set of documents before tenders are invited. Adequate time must be allowed for this.



The traditional procurement method assumes that design will be appointed by consultants, and it does not generally imply that the contractor has any design obligations. If this is to be the case, express terms should be included in the contract.



As the employer appoints consultants to provide advice on all matters of design and cost, they thereby retain total control over the design and quality required.



The contractor depends heavily upon the necessary information and instructions from the architect being issued on time. There is a risk of claims if they are delayed.



The employer decides which specialist firms the contractor is to use, although the contractor may require certain safeguards relating to performance.



All matters of valuation and payment are the responsibility of the employer‟s consultants.



If it is impossible to define precisely the quantity or nature of some of the work, it is still possible to adopt a traditional method on the basis of approximate quantities, provisional sums, or cost reimbursement. However, this is less than a

17

perfect solution: the fuller and more accurate the information, the nearer to the relative safety of the lump sum approach.

2.4.1.5 Advantages and disadvantages of traditional procurement The main advantages of using a traditional procurement method are •

Accountability due to a competitive selection;



Competitive equity as all tendering contractors bid on the same basis;



Design lead and the client is able to have a direct influence which can facilitate a high level of functionality and improve the quality in the overall design;



Price certainty at the award of the contract;



Variations (changes) to the contract are relatively easy to arrange and manage; and



A tried and test method of procurement which the market is very familiar with.

The main disadvantages of using a traditional procurement method are •

Can be a timely process to produce the full contract documentation. Tenders documents from an incomplete design can be produced but can lead to less cost and time certainty, and may lead to disputes;



Overall project duration may be longer than other procurement methods as the strategy is

sequential and construction cannot be commenced prior to the

completion of the design; and •

No input into the design or planning of the project by the contractor as they are not appointed during the design stage.

2.4.1.6 When should traditional procurement method be used Turner (1990) stated that traditional procurement method should be used when •

A programme allows sufficient time;



Consultant design is warranted;



A client wishes to appoint designers and contractors separately;



Price certainty is wanted before the start of construction;



Product quality is required; and



A balance of risk is to be placed between the client and constructor.

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 fixed–price approach, located at one end of the continuum shown in Figure 2.3, takes into consideration only the price as the sole criterion for selection. Accordingly, the lowest bidder is awarded the contract in an approach very similar to the traditional general contractors‟ procurement. In a one-step procurement procedure, the design and construct team may be selected based on price only or a best value combination of financial and technical criteria. A two-step selection approach consists of a prequalification of the prospective design and construct teams using a Request for Qualification (RFQ), followed by an evaluation of the price and technical aspects. This represents the “best value” approach and the weights given to each of the technical and financial criteria differs from one organization to the other. It is worth noting that management aspects, an organization‟s financial standing, in addition to previous design and construct team experience are also considered in a best value procurement approach (Molenaar and Johnson, 2001).

Figure 2.3: Selection methodology continuum, source: Molenaar and Gransberg (2001)

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 client‟s requirements might be stated briefly and simply, perhaps little more than a site plan and schedule of accommodation. On the other hand, they may be a document of several hundred pages with precise specifications. The contractor‟s input might be restricted to taking a scheme design supplied by the client and developing details and production information. It is however better to specify in terms of the performance requirement rather than to prescribe in detail, because this leaves the responsibility for design and selection firmly with the contractor. Design and construct procurement methods offer certainty on the contract sum and bring cost benefits. The close integration of design and construction methods and the relative freedom of the contractor to use their purchasing power and market knowledge most effectively can provide a client with a competitive price. With a design and construct procurement method, it is possible ensure a quicker start on site, and the close integration of design and construction can result in more effective programming. Time, however, is needed by the client‟s consultants to prepare an adequate set of requirements, and time is needed to compare and evaluate the schemes from competing tenderers. Once a contract is signed, any changes by the client can prove costly.

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

Client

Design Consultant

Client

Design Consultant

Contractor

SubContractor (s)

Contractor

Pre-Novation Contract

SubContractor s)

Post-Novation Contract

Figure 2.4: Pre and post-novation contracts, source: Davis et al., (2008)

Rowlinson (1987) suggested that design and construct/build contractors organize their activities in three different ways as the following 1. Pure design and build The contractor strives for a complete and self-contained approach where all the necessary design and construction expertise resides within one organization that has 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. 2. Integrated design and build In this form,

a

core

of

designers

and

project

managers exists within the

organization, but this type of contractor is prepared to buy in design expertise whenever necessary. Although more effort is needed to integrate the internal and external members of the design and build team, in-house

project managers are

employed to co-ordinate these functions. 3. Fragmented design and build Many contractors, both large and small, and including national builders, operate a fragmented approach to design and build projects, whereby external design consultants are appointed and co-ordinated by in-house project managers whose other main task is to take and refine client briefs. Under this regime, many of the integration and co-ordination problems of traditional approach are likely to manifest themselves along with some role ambiguity among the professions as they come to terms with the builder as leader of the design and construction team. Larmour (2011) stated that this method is used to describe procurement which involves contractor design and construction. It is generally associated with good cost certainty and a minimization of risk to the client. This method is often associated with programme benefits as design and construction can be overlapped. There are many variants within this category, such as Direct (when the designer/contractor is appointed following appraisal, there is no price competition); Competitive (when the price and design proposal are submitted based on the employers concept design); Develop and Construct (part design to produce employers requirements, contractors complete and guarantee the design in competitive tender). Competitive is prevalent in current procurement, for example the building schools for the future programme. Develop and construct is the most commonly referred to as „Design and Build‟ in the private construction sector. Turner (1990) stated that a number of variations of design and construct exist, which include

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. 3. Develop and construct Consultants design the building required to a partial stage, often referred to as „scope design‟, then competitive tenders are obtained from a select list of contractors to develop and complete the design and construct the building. The amount of consultant design can vary depending on the client‟s needs. 4. Package deal / Turnkey This method is often used where the contractors competing will use a significant part of their own or another proprietary building system or they will be constructing variations of a repetitive theme. There is limited scope for innovation when this method is used. Some contractors may offer to find a site, to sell, mortgage or lease their product, obtain approvals etc at a risk to themselves or at a charge to the client. 5. Novation Sometimes referred to a design, novate and construct.

This is where the

contractor takes over from the client a previous contract for the design work, completes the design and constructs the work. El Wardani (2004) classified the design & construct procurement method into the following procurement methods 1. Sole source selection The sole source procurement method involves the direct selection of the design and build/construct team without proposals.

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2. Qualifications-based selection In a qualifications-based selection, the owner selects the most qualified design and construct team through an RFQ and often negotiates only with that entity to a “fair and reasonable” price. Selection of the team is primarily based on qualitative criteria such as past performance, design and build team reputation, technical competence and financial stability. 3. Fixed budget/best design selection The fixed budget/best design is a procurement method where the owner specifies the project budget during the RFP process.

The

design and build teams

compete by placing as much scope as they can in their submitted proposals. The design and build teams are selected based on qualitative and technical aspects. 4. Best value selection The best value procurement method is an approach where the design and build teams respond to the owner by submitting proposals that are primarily evaluated based on the technical aspects together with the associated cost of the project. Negotiations may take place after the proposal submittals phase. The owner selects the proposal that offers the best value. 5. Low bid selection The low bid is a procurement method where the owner primarily selects the design and build team based on the project value and related cost items. Cost criteria represent more than 90% of the design and build team procurement selection process.

2.4.2.1 Key points for design and construct procurement method •

In design and construct contracts, in theory, there is usually a single point of responsibility. The employer therefore has the advantage of only on firm to deal with – and one firm to blame if things go wrong. In practice, the employer‟s requirements are detailed to the extent that the contractor‟s design contribution, and liability, is diminished.

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The employer lacks control over the detailed design; however, this might be acceptable where broad lines of the scheme are satisfactory and the detail relatively less important.



Construction work can be started early as a great deal of detailed design can proceed in parallel. However, it is mainly the contractor who benefits from this operational flexibility.



Responsibility for completing on time rests wholly with the contractor. There should be no risk of claims because of the allegations that information from the employer is late. This obligation on the contractor to be responsible for the flow of their necessary information is one of the most attractive features of design and construct.



There is greater certainty of cost, even to the extent that, if required, responsibility for investigating site and subsoil conditions can be made entirely the contractor‟s. Any changes in the employer‟s requirements can affect the contract sum, however, and are likely to prove costly.



It is always advisable to ask for information about who the contractor intends using as a designer. Adequate professional indemnity insurance should always be a requirement.



The employer should be advised to appoint consultants to provide advice on the preparation of the requirements; it is important that adequate time is allowed for this to be done adequately.



The requirements might include specific items or provisional sums, bit generally it is prudent to prescribe performance criteria, so that a high degree of reliance is placed on the contractor.



In the absence of any stipulations to the contrary, the contractor‟s design obligations are absolute. However, they are usually reduced in standard forms of contract to those the professional‟s duty of using reasonable skill and care.



It is difficult to evaluate competitive tenders realistically. Tenderers should be informed of the criteria to be used, and whether price is likely to be the prime consideration.

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Benefits can arise from designers and estimators having to work closely together. The contractor‟s awareness of current market conditions and delivery times can ensure that a contract runs smoothly, economically and expeditiously.

2.4.2.2 Advantages and disadvantages of design and construct procurement method The main advantages of using a design and construct approach to procurement are •

Client has to deal with one firm and reduces the need to commit resources and time to contracting designers and contractors separately;



Price certainty is obtained before construction commences as client‟s requirements are specified and changes are not introduced;



Use of a guaranteed maximum price with a savings option split can stimulate innovation and reduce time and cost;



Overlap of design and construction activities can reduce project time; and



Improved constructability due to contractor‟s input into the design.

The main disadvantages of using a design and construct approach to procurement are •

Difficulties can be experienced by clients in preparing an adequate and sufficiently comprehensive brief;



Client changes to project scope can be expensive;



Difficulty in comparing bids since each design will be different, project programme will

vary between bidders, and prices for the project will be

different for each design; •

Client is required to commit to a concept design at an early stage and often before the detailed designs are complete; and



Design liability is limited to the standard contracts that are available.

2.4.2.3 When should design and construct procurement be used Turner (1990) stated that design and construct procurement should be used when a •

Building is functional rather than prestigious;



Building is simple rather than complex, is not highly serviced and does not require technical innovation;



Brief for scope design is likely to change; 26



Programme can be accelerated by overlapping design and construction activities;



Single organization is required to take responsibility and risk for design and construction.

2.4.3 Management procurement method (Packaged) Larmour (2011) stated that this method is used to describe procurement which involves a contractor providing management services. The two main variants of this are Management Contracting and Construction Management, which are both very different approaches. In Management Contracting, the contractor provides management services to control and coordinate all site activities, sub letting works to suitable contractors on a competitive basis. In Construction Management the client enters into separate contracts with the construction manager, designers, and trade contractors. Construction Management is generally associated with programme savings, and a higher degree of control for the client in terms of design quality, but less cost certainty. Mathonsi and Thwala, (2012) stated that under a management-oriented procurement system, the management of the project is carried out by an organization working with the designer and other consultants to produce the designs and manage the physical operations which are carried out by contractors. When using systems within this category, the client will need to have a greater involvement with the project than when employing any of the other methods. Davis et al., (2008) stated that several variants of management procurement forms exist, which include; management contracting, construction management and design and manage. There are some subtle differences between these procurement methods. In the case of management contracting, the contractor has direct contractual links with all the works contractors and is responsible for all construction work. In construction management, a contractor is paid a fee to professionally manage, develop a programme and coordinate the design and construction activities, and to facilitate collaboration to improve the project‟s constructability.

2.4.3.1 Management contracting procurement method The CIOB report (2010) stated that management contracting works by having a contractor managing a series of „works‟ contractors or subcontractors. Advantages 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.

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Competitive tenders for works packages follow later and they will usually, though not always, will be lump sum contracts with bills of quantities.

2.4.3.2 Construction management procurement method The CIOB report (2010) stated that construction management is not a widely used procurement method – its main reason for existence is for use on large and/or very complex construction works. The system works by having a construction manager as a point of contact, who will typically be head of a design team, who co-ordinates the project in terms of the various construction operations on site. Construction management is generally considered to be the least adversarial form of procurement, and is often used when design needs to run in tandem with construction. Client Project Manager (Advisor)

Architect

Design Consultants

Quantity Surveyor

Construction Manager

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.

2.4.3.3 Design and manage procurement method Turner (1990) stated that a design and manage procurement method is similar to management contracting. Under a design and manage contract, the contractor is paid a fee and assumes responsibility, not only for works contractors, but also for the design team. The common variations of design and manage are •

Contractor A project design and management organization designs and manages the work, generally for a fee and delivers the project by employing works contractors as its subcontractors to design/or construct.



Consultant A project designer/manager is the client‟s agent, who designs and manages the work, obtains subcontract tenders from works contractors who then each enter into a direct contract with the client.

2.4.3.4 Key points for management procurement method •

Management procurement methods are best suited to large, complex, fast moving projects where early completion is desirable.



This method of procurement depends upon a high degree of confidence and trust. There is no firm contract price before the work starts on site, and the decision to go ahead usually has to be taken on the basis of an estimate.



The management contractor is the agent of the client, and should therefore put their interests first throughout the project.



It is an advantage to appoint the management contractor at early stage, so that their knowledge and expertise are available to the design team throughout the pre-construction period.

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Much of the detailed design work can be left to proceed in parallel with the site operations for some work packages, thus reducing the time needed before the project starts on-site.



The client has a considerable degree of flexibility on design matters. The design can be adjusted as construction proceeds, without sacrificing cost control. This would not be possible with traditional methods.



The management contractor can select specialists and order materials with long lead-in times for delivery in good time without any of the uncertainties and complexities which attend traditional nomination procedures.



The project proceeds on the basis of a contract cost plan, but an independent quantity surveyor is required for effective cost control.



A competitive tendering element is retained for all works contracts, which usually account for most of the overall prime cost. Tenders for works packages will normally be on a lump sum basis.

2.4.3.5 Advantages and disadvantages of management procurement method The main advantages of using a management approach to procurement are •

The client deals with only one firm, which enables improved coordination and collaboration between designers and constructors;



Potential for time savings for the overall project as design and construction activities are overlapped;



Under a design and manage form, the contractor assumes risk and responsibility for the integration of the design with construction;



Works packages can be let competitively at prices that are current;



Improved constructability through constructor input into the design;



Roles, risks and responsibilities for all parties are clear; and



Flexibility for changes in design.

The main disadvantages of using a management approach to procurement are •

Price certainty is not achieved until the final works package has been let



Informed and proactive client is required.

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Poor price certainty



Close time and information control required



Client must provide a good quality brief to the design team as the design will not be complete until resources have been committed to the project (Construction management and management contracting); and



Client loses direct control of design quality which is influenced by the constructors (design and manage).

2.4.4 Public private partnership procurement method "PPPP" Larmour (2011) stated that public private partnership (PPP) procurement method involves two or more organizations working together to improve performance through agreeing mutual objectives, devising a way for resolving any disputes, and committing themselves to continuous improvement, measuring progress and sharing gains and pains. Examples include framework agreements and joint ventures. This is a relatively new form of procurement and although discussed in the Latham report in the 1990‟s, has taken a long time to come into general use. It is more commonly seen within large civil engineering projects, than individual building projects. The CIOB report (2010) believes that this method is the “most efficient way of undertaking all kinds of construction work including new buildings and infrastructure, alterations, refurbishment and maintenance”. Long-term (strategic) partnering commitments showcase the real benefits of the procurement method, although shortterm (project-specific) partnering has also proved highly beneficial on individual projects. Under this procurement method, the client lays down a framework for the overall administration of the project within which he/she has the discretion to use the most appropriate of all the procurement systems contained within the other three methods. In PPP procurement method quantity surveyors play an integral role by providing a wide range of services, which include contractual issues; it also offers quantity surveyors an opportunity to act as independent advisors within the system (Cartlidge, 2002).

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The principles of this method include a decision making process, mutual objectives, and an overall improvement in performance. As more projects are worked on in tandem, a greater understanding of how to accomplish best practice, reduce costs and attain value for money is achieved. Partnership forms are typically used for high complex projects. A detailed description of their characteristics and the conditions for using such forms of collaborative arrangement can be found in the Victorian State Government Report (2006) „Project Alliance Practitioners Guide‟.

2.5 Factors affecting the selection of procurement method Maizon et al., (2006) presents the various factors influencing the selection of procurement systems in the Malaysian construction industry. The selection criteria that are identified as the most common criteria influencing the choice of procurement method are time, controllable variation, complexity, quality level, price certainty, competition, responsibility division, risk avoidance, price completion, government policy and client‟s familiarity in a procurement method. Shiyamini et al., (2007) focused on the selection criteria in terms of client requirements, project characteristics, and external environment, thus ensuring that the selection criteria have been focused at macro level. The results of factor analysis revealed nine significant factors from client requirements which are risk management, time availability and predictability, price certainty, price competition, accountability, flexibility for changes, quality of works, responsibility and parties‟ involvement, and familiarity. Six factors from the project characteristics which are project cost and funding method, project complexity, project type, time constrains, degree of flexibility, and payment modality. Five factors from the external environment which are market completion, economic conditions and the fiscal policy, technology, socio cultural suitability, and regulatory environment. Babatunde et al., (2010) reveals that the variants of traditional method of contract procurement are the most adopted in project execution in Nigeria and the project completion at estimated time ranks as the highest factor considered for traditional method, while quality assurance ranks highest with non-conventional method. The results of the study further indicate that the choice of variants of the traditional

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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 nonconventional procurement method, indicating that much more factors are considered in making choice of the variants of the non conventional procurement method than the variants of traditional procurement methods in Nigeria. Odhigu et al., (2011) explains that the procurement strategy is the outcome of a series of decisions which are made during the early stages of a project and it is one of the most important decisions facing the project client. No single procurement system can be applied universally on all construction projects. Each procurement system is chosen for a particular project based on certain criteria which use in the selecting procurement systems and those criteria are 1. Time (Speed); 2. Quality level; 3. Risk allocation/avoidance; 4. Flexibility to change design during both design and construction period; 5. Responsibility; 6. Complexity; 7. Price competition; 8. Certainty of cost and time; 9. Disputes and arbitration; 10. Project type; 11. Client's experience; 12. Experienced contractor availability; 13. Client‟s willingness to be actively involved; 14. Project site location; 15. Client‟s trust in other parties; 16. Political constraints;

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17. Project size; 18. Regulatory impact; 19. Market competitiveness; 20. Client‟s requirement for value for money; 21. Material availability; 22. Client‟s financial capability. While the researcher found that principal factors and criteria that influence selection of procurement systems are 1.

Client‟s willingness to be actively involved;

2.

Flexibility to change design during both design and construction period;

3.

Risk allocation/avoidance;

4.

Project size;

5.

Client's experience;

6.

Certainty of cost and time;

7.

Experienced contractor availability;

8.

Client‟s trust in other parties;

9.

Client‟s requirement for value for money;

10. Project type. Rosli et al., (2006) mentioned that it is very important at the very outset of the project to carefully consider all factors when selecting the most appropriate procurement approach for a construction project. This is because each system has its own feature and peculiarity that will have effect on the cost, time and quality of the project i.e. the project performance. The author stated that the traditional system with measurement contract method are also widely used throughout the Middle East except in Iran and Iraq. Bahrain, Egypt, Jordan, UAE, Qatar, Oman and Saudi Arabia are also using this method in most of their construction projects as part of the tender and contract documentation. Measurements are

based

on the principles of measurement

(International). It was pointed out that their use has not only provided the client with the benefit of lump sum bid, but also a document for his own financial control. Husam and Sedki (2009) explained the result is fifteen criteria which are (Quality level, speed, flexibility for changes, technology, complexity, time predictability, certainty of

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cost, familiarity, responsibility, risk avoidance, accountability, client involvement, price competition, availability of procurement system in the local market, and legal issues). Franco et al., (2002) concluded that twelve factors affecting the selection of procurement method in construction as being applicable in Hong Kong, which they are  Firms‟ background 1. Reputation; 2. Technical competence/qualification; 3. Experience with similar project. 

Past performance 4. Cost control; 5. Quality of work; 6. Time control.



Capacity to accomplish the work 7. Present workload; 8. Availability of qualified personnel; 9. Professional qualification/experience.



Project approach 10. Approaches to time schedule; 11. Approaches to quality; 12. Design approach/methodology.

In addition, the consultant fee, being one of the factors thought to be most likely to be considered by clients in Hong Kong, was added as a further criterion. Thomas (2001) illustrated that the selection and use of an appropriate procurement system is crucial to project success. The results indicate that there are nine procurement selection criteria commonly used by Australian clients: speed, time certainty, price certainty, complexity, flexibility, responsibility, quality level, risk allocation and price competition. Only time certainty and price certainty were seen by the respondents as unambiguous criteria, as the completion date and price can be objectively predicted by the client beforehand.

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Shafik and Martin (2006) investigates favored procurement methods and the factors which influence their selection for house building in Scotland. The outcomes and experience gained highlight the fact that many factors have an impact on the selection process. Speed and level of quality is the greatest factor followed by client experience, then the project nature, and finally level of risk and cost. Mahon (2011) confirmed that the procurement selection parameter of client requirement for budget/cost requirements was universally rated as the single most influential parameter on procurement route selection. This was closely followed by client requirement for on time completion. These two parameters were clearly rated as being the most influential in terms of procurement selection. The next most influential parameters were client experience and client requirement for in terms of value for money. Abu Bakar et al., (2009) mentioned that among the most important factors in Aceh rehabilitation and reconstruction in procurement stage are timing, responsibility, and quality. The local authority, local community and contractors were involved in the implementation of the procurement method in term of participation, approval, supervision and implementation. These factors are necessary to guaranty the handover of the projects to the client in accordance to the contract. In addition, it was stated that the procurement selection is a very important factor to deliver the project to the user. Local authorities, contractor, and community as main parties that contribute to the time overrun should be considered before the start of the procurement stage. Type of project and approval from local authorities are other factors that contributed to time overrun in procurement selection. In the procurement implementation, factors, which can cause possibility in changing the initial design, are location, material, weather, and the worker from the community. There are many methods of procurements that are available to be chosen from. However, the traditional method was preferred by the NGOs to procure the projects due to the ease and familiarity of implementation by the NGOs and local contractors even if it needs a long completion of time. Mortledge et al., (2006) summarized that the following factors should be borne in mind when determining the most appropriate procurement method are

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External factors: consideration should be given to economic, commercial, technological, political, social and legal factors when selecting a procurement method



Client characteristics: a client‟s knowledge and experience with procuring construction projects will influence the procurement method adopted. Procurement selection is influenced by the culture of the organization and the degree of desired client involvement



Project characteristics: the size, complexity, location and uniqueness of the project should be considered as this will influence time, cost and risk.



Ability to make changes: changes in projects are inevitable. The desired level of flexibility for the client to make changes during the project will influence the selection of a procurement method



Cost: an assessment for the need for price certainty prior to commencement of construction by the client should be undertaken. If price certainty is required, then design must be complete before construction commences and design changes minimized.



Time: most capital works project are required within a specific time frame. If early completion is a critical factor then a procurement method that supports speedy completion may be favored.

Love et al., (2008) illustrated that the selection criteria that the first focus groups identified as being important criteria to be considered during the procurement selection process were: project value, project complexity, project type (standard/novelty), location (regional/local), stakeholder integration, political considerations, client needs, and industry culture. Surprisingly, political considerations and the prevailing industry culture were issues that participants wanted to discuss. It was perceived that the selection of a procurement method was often a fait au complaint for the agency. This is because of the requirement for cost certainty and the issues associated with probity and accountability, and thus deemed to be transparent features the traditional procurement process. It was stated by one participant that “Factors such as project value, project complexity, and project type are a given. We know from our own personal experience that traditional lump sum methods always work and give us cost certainty. When it‟s a complex project or it needs to be done 38

quickly we may consider construction management. The biggest issue we have is that often it‟s decided from above because it‟s the flavor of the month”. Tran and Molenaar (2012) observed that the four following critical risk factors appear in all delivery method selection process (1) unexpected utility encounter; (2) third-party delays during construction; (3) geotechnical investigation; and (4) delays in reviewing and obtaining environmental approvals. This similarity indicates that these four critical risk factors are essential to consider for all delivery methods. However, it should be noted that the ranking of these factors diverge from one method to other methods. For instance, unexpected utility encounter is ranked first in design-bid-build (DBB), but is ranked eighth and tenth in construction manager/general contractor (CM/GC) and design-build (DB) respectively. Also indicate that the major difference in the delivery selection process of DBB, CM/GC, and DB could be explained by the identified following five risk factors: (1) constructability of design; (2) delivery schedule; (3) railroad agreements; (4) obtaining other agency approvals; and (5) scope definition. The findings from this study not only encourage decision-makers to perform risk analysis at the beginning of the project development process but also serve as the input of risk based frameworks for selecting an appropriate project delivery method in high construction industries. Eyitope et al., (2012) finds that a list of thirteen critical criteria was identified. These can be classified into four major areas of core consideration as follows; A - Project technicality 1. Type/Complexity of the project; 2. Expected performance quality; 3. Design and product specifications; 4. Completion time. B - Project business case and financing 5. Availability /Funding structure; 6. Number of competitors; 7. Price certainty and market structure. C - Project risk management 8. Controllable variation;

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9. Responsibility division and integration; 10. Risk sharing and allocation. D - Public policy requirement 11. Specific government directive; 12. Trend in client‟s familiarity; 13. Political reasons and interference. The selection of project procurement strategy should necessitate robust analysis of project environment, in terms policies, available resources, risk associated, technicality, and preferred contractual arrangements amongst all parties towards devising a method of project implementation and to achieving project goals of time, cost and quality.

2.6 The decision to select procurement method Davis et al., (2008) stated that the decision as to what procurement system to use should be made as early as possible and underpinned by the client‟s business case for the project. The risks associated with each procurement system and how they can affect the client should also be considered. With this in mind, Figure 2.6 provides an overview of the „speculative risk‟ (i.e. risk that can be apportioned in advance as decided by parties in a contract) to a client and contractor for specific procurement methods.

Figure 2.6: Risk apportionment between client and contractor, source: Davis et al., (2008)

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In design and construct forms of procurement, the contractor predominately assumes the risk for design and construction of the project. Design and construct variations exist where the level of design risk can be apportioned more evenly, for example, novation. With traditional lump sum contracts the intention is that there should usually be a fair and balance of risk between parties. The balance can be adjusted as required, but the greater the risk to be assumed by the contractor, the higher the tender figure is likely to be. With management forms of procurement the balance of risk is most onerous for the client as the contractor is providing only „management expertise‟ to a project. However, under a design and manage method a high of risk can be placed on the contractor for design integration.

2.7 Local studies Enshassi and Modough (2012) stated that a project can be procured using different procurement methods ranging from single source: direct hiring, negotiation, restrictive bid, to open competition procurement. An owner may select a contractor through competitive bidding, such as the lowest-bidder system and the non-lowestbidder system. Procurement type is a critical decision because it defines the method to select the key player in the project, which is the construction firm that is expected to deliver the project. This decision greatly impacts the performance because if the construction firm is not qualified to achieve the project goals, serious problems may arise during and after construction. Different procurement systems with evaluation criteria have been developed to assist owners during the contractor selection process. The main advantages of these methods and evaluation systems is that they provide a systematic and objective procurement approach that takes into consideration numerous factors other than the price of the bid. The finding obtained from three case studies exposed in Gaza Strip is the existence of a proportional relation between awarding bids to lowest price and the problems encountered during implementation when used a traditional procurement method. The three cases of the study were awarded to lowest price contractors; the results show the existence of the following problems

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)

Type

Works Goods Services Miscellaneous Total

Procurement Method ICB NCB Other NBF US $ million

Total Financing

12.60

170.24

50.98

1.17

234.99

0.00

103.31

41.37

0.00

144.68

9.37

2.67

5.59

0.16

17.79

4.37

1.57

6.96

0.00

12.90

11.52

0.60

9.49

2.53

24.14

10.52

0.60

8.50

0.00

19.62

0.00

2.63

29.34

9.89

41.86

0.00

2.63

27.85

0.00

30.48

33.49

176.14

95.40

13.75

318.78

14.89

108.11

84.68

0.00

207.68

Moreover, for national shopping (NS), in many cases: (i) municipalities did not use written invitations in soliciting quotations; (ii) local governments did not prepare quotation evaluation reports and did not issue purchase orders, relying instead on the quotations opening minutes and committee decisions; (iii) the value of some contracts were above the NS thresholds.

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.

2.8 Chapter summary This chapter introduced the concept of procurement method definition and history, issues for future procurement, different types of procurement method, critical success factors influensing the selection of procurement method and the decision to select an appropriate procurement method in construction industry. After studying many previous studies in this chapter, the factors affecting the selection of procurement method were categorized into six groups: "client group"; "cost group"; "time group"; "risk group"; "project characteristics group"; and " external environment group". The selection of an appropriate procurement method in the construction projects in the Gaza Strip based on factors such as (client reputation, experience, culture, financial capability, price compitions, time constrains, risk avoidance, project type, size, and complexity) are presented an applicable tool, in order to determine their impacts on the selection process of procurement method. Regarding the practical approaches that could be used in the procurement method selection process, the previous studies indicate that there are many methods that can be used as a procurement methods and indicate many approaches to select an appropriate procurement method, but the effectiveness of these approaches depends on different factors which directly affect the selection of the best procurement method. Table 2.2 illustrates the factors that influencing the selection of procurement method which was collected from the literature review. The factors categorized into six groups.

43

Table 2.2: Factors that influencing the selection of procurement method

X

Eyitope et al. (2012)

X

Daniel Tran and Keith M (2012)

Peter E.D et al. (2008)

Abu Hassan Abu Baker (2009)

Cameron (2011)

M. Shafik & P. Martin (2006)

S. Thomas (2001)

Franco et. al. (2002)

Husam & Sedki (2009)

Rosli et. al. (2006)

Odhigu et. al. (2011)

Mortledge et al. (2006)

A

Babatunde et. al. (2010)

Factors

Shiyamini et. al. (2007)

No.

Maizon et al. (2006)

Source

Factors related to client

1

Client's nature and culture (public or private)

2

Client reputation

3

Client's experience in procurement methods

4

Client's trust in other parties

5

Flexiability for changes and variations

6

Client's financial capability

7

Accountability

8

The degree of desired client involovement

9

Availability of qualified personnel (procurement staff)

B

Factors related to cost

X

X

X

X X X X

X X

X

10

Price competition

11

Design cost

12

Consultant fees

13

Price certainly prior to commencement

14

Cost control

C

X

X X

X

X

X

X X

X

X

X

X X

X X

X

X X

X

X

X

X X

X

X

X X

X

X

X

Factors related to time

15

Speed

16

Minimize design time

17

Time constrains

X X X

X

44

X

X

X

X

18

Time control

19

Project time schedule

20

Completion time

21

Delivery schedule

D

Eyitope et al. (2012)

Daniel Tran and Keith M (2012)

Peter E.D et al. (2008)

Mortledge et al. (2006)

Abu Hassan Abu Baker (2009)

Cameron (2011)

M. Shafik & P. Martin (2006)

S. Thomas (2001)

Franco et. al. (2002)

Husam & Sedki (2009)

Rosli et. al. (2006)

Odhigu et. al. (2011)

X X

X X

X

X

X

X

Factors related to risk

22

Risk avoidance/allocation

23

Responsibility

24

Disputes & arbitration

25

Geotechnical investigation

E

Babatunde et. al. (2010)

Factors

Shiyamini et. al. (2007)

No.

Maizon et al. (2006)

Source

X X

X X

X

X X

X X

X

X X

X

X X

Factors related to project characteristics

26

Degree of project complexity

27

Project type and nature

28

Funding method

29

Project site location

30

Project size

31

Project payments modality

32

Quality level of project

33

Project methodology

34

Expected performance of project

35

Available resources of project

36

Constructability of design

X

X X X

X

X

X

X

X X

X X

X

X

X X X

X

X

X

X X

X

X

X X X

X

X

X X

45

37

Project completion at estimated time

38

Project completion at estimated cost

F

X X

Eyitope et al. (2012)

Daniel Tran and Keith M (2012)

Peter E.D et al. (2008)

Mortledge et al. (2006)

Abu Hassan Abu Baker (2009)

Cameron (2011)

M. Shafik & P. Martin (2006)

S. Thomas (2001)

Franco et. al. (2002)

Husam & Sedki (2009)

Rosli et. al. (2006)

Odhigu et. al. (2011)

Babatunde et. al. (2010)

Factors

Shiyamini et. al. (2007)

No.

Maizon et al. (2006)

Source

X

Factors related to External environment

39

Procurement policy

40

Market completion/structure

41

Market cometitiveness

42

Economic conditions

43

Political considerations

44

Social factors

45

Environment impact

46

Other parties involvement/role/participation

47

Commercial conditions

48

Legal issues/factors

49

Availability of procurement system in the local market

50

Number of cometitors

51

Technology

52

Stakeholder integration

53

Worker conditions

54

Material availability

X

X X

X X

X

X X X

X

X X X

X X X

X

X X X

46

X

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

literature review were: questionnaire

survey,

interviewing,

case studies

from and

modeling. The methodology adopted for this research can be summarized in the following points 

Identifying the main and sub factors affecting the selection of procurement method in construction projects in the Gaza Strip,



Developing a research model,



Conduct several interviews and design a questionnaire,



Instrument validity (validity of the questionnaire),



Research sample and size,



Method of collecting data,



Instrument (questionnaire) reliability,



Method of data analysis,



Establish a framework.

The research methodology flowchart is shown in Figure 3.1.

47

Research objectives

Literature review (International) about factors of proc. method selection

Interview (Local proc. expert) about factors of proc. method selection

Questionnaire design

Pilot study

Questionnaires validity

Questionnaires reliability

Sample size determination

Questionnaire distribution

Results analysis

Ranking main factors

Ranking sub-factors

Developing a framework

Results and discussion

Conclusion and Recommendations

Figure 3.1: Research methodology flowchart

3.2 Research design The purpose of this research is to identify the factors affecting the selection of procurement method in construction projects in the Gaza Strip and develop a flowchart

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. Table 3.1: Participants attended interview

No. Target 1 Procurement experts 2 Engineering consulting offices

No. of participants 4 3

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.

3.4 Developing the questionnaire A questionnaire survey is designed to obtained further information in order to support the research study objectives and it is also designed based on identified the main and sub-factors that will be affect the selection of best procurement method in construction projects in the Gaza Strip, and to assist in future in formulated a model for the selection of procurement method. In this study, the questions of the research questionnaire are constructed based on 

Literature review stated in previous chapter (Chapter 2)



Several interviews (Seven interviews) with four local procurement experts and three client's representative from engineering consulting offices to obtain different thoughts, which can be useful for creating questions.



The experience of the researcher and some engineers in procurement field management.

A six page questionnaire was developed as a research tool for this study and it was built mainly using closed questions. Moreover, the questionnaire was developed in English version (Annex 1). The questionnaire consists of four sections Section one: general information (Client's representative profile). Section two: respondent‟s rank of the main factors affecting the selection of procurement method. This section aims to make comparison between scores resulted from ranking the main factors presented in it and scores resulted from ranking the sub-factors presented in section three. This comparison will check the priority order of main factors in both ranking. Section three: respondent‟s rank of the sub-factors affecting the selection of procurement method. As this section contains sub-factors affecting the selection of

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.

3.5 Statistical analysis tools The researcher would use data analysis both qualitative and quantitative data analysis methods. The data analysis will be made utilizing (SPSS 20). The researcher would utilize the following statistical tools: 1) Frequency and descriptive analysis 2) Cronbach's Alpha for reliability statistics 3) Spearman Rank correlation for validity 4) Relative Importance Index (RII) 5) Nonparametric Tests (Sign test, Mann-Whitney test, Kruskal-Wallis test) The relative importance index methods (RII) are used to determine the ranks of all factors and sub-factors. The relative importance index is computed as (Sambasivan and Soon, 2007) 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 Methodology for this research This research discusses the factors affecting the selection of procurement method within construction projects in the Gaza strip. The basic methodology which is considered to achieve the objectives of this research is as the following issues: 3.6.1 Concerning objective one: (To study and investigate the major practices of variant types of procurement methods used in Gaza Strip construction industry) A structured questionnaire survey approach is considered to study the various types of procurement methods used in the Gaza Strip construction projects. In addition, the questionnaire can assist to study the attitude of clients, procurement expert, and engineering consultants towards the importance

of

the

selection an approprate

procurement method in the Gaza Strip construction industry. 3.6.2 Concerning objectives two & three: (To identify and rank the factors affecting the selection of procurement method) Literature review about the selection of procurement method was reviewed by (Maizon et al., 2006; Shiyamini et al., 2007; Babatunde et al., 2010; Odhigu et al., 2011; Rosli et al., 2006; Husam and Sedki, 2009; Franco et al., 2002; Thomas, 2001; Shafik and Martin, 2006; Mahon, 2011; Abu Bakar et al., 2009; Mortledge et al., 2006; love et al., 2008; Tran et al., 2012; Eyitope et al., 2012) to identify the main and sub-factors affecting the selection of procurement method in construction projects in Gaza Strip. In addition, there are other local factors that have been added as recommended by local procurement experts such as availability of procurement system in the local market and procurement policy constrains factor.

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

No.

Main group factors

Sub-factors Client's nature and culture (public or private) Client reputation Client's experience in procurement methods Client's trust in other parties

1

Client

Flexibility for changes and variations Client's financial capability Accountability The degree of desired client involvement Availability of qualified personnel (procurement staff) Price competition Design cost

2

Cost

Consultant fees Price certainly prior to commencement Cost control Speed Minimize design time Time constrains

3

Time

Time control Project time schedule Completion time Delivery schedule Risk avoidance/allocation

4

Risk

Responsibility Disputes & arbitration Geotechnical investigation

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

6

External environment

Other parties involvement/role/participation Commercial conditions Legal issues/factors Availability of procurement system in the local market Number of competitors Technology Stakeholder integration Worker conditions Material availability

The relative importance index method (RII) is used here to determine clients, procurement expert and engineering consultants perceptions of the relative importance

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 framework shall be development in order to assist different organizations in Gaza Strip in the selection of an appropriate procurement method. This framework will develop depending on survey results, literature review, and the experience of the researcher and other procurement experts in construction management in Gaza Strip in order to establish a model for the selection of procurement method in the future studies.

3.7 Pilot study A pilot study provides a trial run for the questionnaire, which involves testing the wording of questions, identifying ambiguous questions, testing the technique that used to collect the data. After the preliminary testing, a pilot study was conducted to evaluate the questionnaire; the researcher distributed the questionnaire to a sample of nine different local procurement experts and client's representative such as projects manager and consulting office engineer to fill them. They have a strong practical experience in procurement and construction management fields. Their sufficient experiences are a suitable indication for pilot study. The purpose of this step is to discover if the questions are well understandable or not, also to find out any problem that may raise in filling the questionnaire. Generally speaking, it appeared that respondents had no difficulty in understanding the items or the instructions to complete the questionnaire. The following items are summary of the main results obtained from pilot study: 1. Private clients and their representatives should be added as a respondent of questionnaire, 2. Questionnaire should be started with a cover page explained the aim of the questionnaire, 3. The first part of questionnaire should be general information about the participants and their organizations,

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.

3.8 Instrument validity The questionnaire was reviewed by a group of experts in the field of the study. They were requested to identify the internal validity and to what extent it was suitable to be used as an instrument to realize the goals and aims of this research. The group of procurement experts and client's representatives have agreed that the questionnaire is suitable to achieve the studying goals with some amendments. The researcher has made these amendments in the structure and language of the questionnaire to be consistent with the local environment. The validity content of the questionnaire was tested by many procurement experts and client's representatives. Each of them has full information about the research objectives and was requested to evaluate validity content for each item based on rating the index of content validity. The participants were then requested to rate each item based on relevance on the four point ratings scale. The point scale developed by Yaghmaie (2003) as "1 = not relevant; 2 = item need some revision; 3 = relevant but need minor revision; 4 = very relevant". Based on comments of the experts some minor changes, modifications, and addition were introduced to the questions.

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.

3.8.1.1 Criterion-related validity test Internal consistency of the questionnaire is measured by a scouting sample, which consisted of 30 questionnaires through measuring the correlation coefficients between each paragraph in one factor and the whole factor. To test criterion-related validity test, the correlation coefficient for each item of the group factors and the total of the field is achieved. The results of criterion-related validity test can be obtained with more details and tables as mentioned below. Tables 3.3 through table 3.8 clarify the correlation coefficient for each paragraph of each factor and the total of the factor. The p-values (Sig.) are less than 0.05, so the correlation coefficients of this factor are significant at α = 0.05, so it can be said that the paragraphs of each factor are consistent and valid to be measure what it was set for.

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

No.

Item

1.

Client's nature and culture (public or private) Client reputation Client's experience in procurement methods Client's trust in other parties Flexibility for changes and variations Client's financial capability Accountability The degree of desired client involvement Availability of qualified personnel (procurement staff)

2. 3. 4. 5. 6. 7. 8. 9.

Spearman correlation coefficient

P-Value (Sig.)

0.405

0.000*

0.706

0.000*

0.753

0.000*

0.534 0.585 0.784 0.628

0.000* 0.000* 0.000* 0.000*

0.595

0.000*

0.789

0.000*

Table 3.4: Correlation coefficient of each paragraph of factors related to cost and the total of this factor * Correlation is significant at the 0.05 level

No.

Item

1. 2. 3. 4.

Price competition Design cost Consultant fees Price certainly prior to commencement Cost control

5.

Spearman correlation coefficient 0.666 0.767 0.771

P-Value (Sig.) 0.000* 0.000* 0.000*

0.740

0.000*

0.548

0.000*

Table 3.5: Correlation coefficient of each paragraph of factors related to time and the total of this factor * Correlation is significant at the 0.05 level

No.

Item

1. 2. 3. 4. 5.

Speed Minimize design time Time constrains of project Time control Delays in obtaining environmental approval 6. Delay in the project completion time 7. Delivery time schedule

Spearman correlation coefficient 0.640 0.309 0.256 0.703

P-Value (Sig.) 0.000* 0.005* 0.018* 0.000*

0.745

0.000*

0.672 0.754

0.000* 0.000*

Table 3.6: Correlation coefficient of each paragraph factors related to risk and the total of this factor * Correlation is significant at the 0.05 level

No. 1. 2. 3. 4.

Spearman correlation coefficient 0.653 0.704 0.836 0.728

Item Risk avoidance/allocation Responsibility allocation Disputes & arbitration Geotechnical investigation

58

P-Value (Sig.) 0.000* 0.000* 0.000* 0.000*

Table 3.7: Correlation coefficient of each paragraph of factors related to project characteristics and the total of this factor * Correlation is significant at the 0.05 level

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Spearman correlation coefficient 0.331 0.422 0.564 0.714 0.470 0.701 0.699 0.637 0.653 0.619 0.508 0.541 0.413

Item Degree of project complexity Project type and nature Funding method Project site location Project size Project payments modality Quality level of project Project methodology Expected performance of project Available resources of project Constructability of design Project completion at estimated time Project completion at estimated cost

P-Value (Sig.) 0.003* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000*

Table 3.8: Correlation coefficient of each paragraph of factors related to external environment and the total of this factor * Correlation is significant at the 0.05 level

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Item Procurement policy Market completion/structure Market competitiveness Economic conditions Political considerations Social factors Environment impact Other parties involvement/role/ participation Commercial conditions Legal issues/factors Number of competitors Technology Stakeholder integration Worker conditions Material availability Local authorities approval

Spearman correlation coefficient 0.331 0.661 0.473 0.690 0.528 0.685 0.741

P-Value (Sig.) 0.003* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000*

0.379

0.001*

0.775 0.332 0.463 0.775 0.816 0.744 0.687 0.589

0.000* 0.003* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000*

3.8.1.2 Structure validity test Structure validity is the second statistical test that used to test the validity of the questionnaire structure by testing the validity of each factor and the validity of the whole questionnaire. It measures the correlation coefficient between one factor and all 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

No.

Field

Spearman correlation coefficient

P-Value (Sig.)

1 2 3 4 5 6

Factors related to client Factors related to cost Factors related to time Factors related to risk Factors related to project characteristics Factors related to external environment

0.632 0.666 0.644 0.708 0.833 0.873

0.000** 0.000** 0.000** 0.000** 0.000** 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 α = 0.05, so it can be said that the fields are valid to measure what it was set for to achieve the main aim of the study.

3.9 Instrument (Questionnaire) reliability The reliability of an instrument is the degree of consistency which

measures the

attribute; it is supposed to be measuring (Polit and Hunger,1985). The less variation an instrument produces in repeated measurements of an attribute, the higher its reliability. Reliability can be equated with the stability, consistency, or dependability of a measuring tool. The test is repeated to the same sample of people on two occasions and then compares the scores obtained by computing a reliability coefficient (Polit and Hunger, 1985). The value of the reliability coefficient theoretically can range between -1.00 and +1.00. For most purposes, reliability coefficients above 0.7 are considered satisfactory (Polit and Hungler, 1999). The reliability coefficient was calculated which indicated a high level of reliability. For more accuracy, reliability coefficient was calculated for important parts.

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 Chronbach‟s alfa using SPSS package. Chronbach's alpha method is used to measure the reliability of the questionnaire between each factor and the mean of the whole factors of the questionnaire. The normal range of Cronbach‟s coefficient alpha value between 0.0 and + 1.0, and the higher values reflects a higher degree of internal consistency. The Cronbach‟s coefficient alpha was calculated for each factor of the questionnaire. The formula that determines alpha is fairly simple and makes use of the items (variables), k, in the scale and the average of the inter-item correlations, r

As the number of items (variables) in the scale (k) increases the value α becomes large. Also, if the intercorrelation between items is large, the corresponding α will also be large. Since the alpha value is inflated by a large number of variables then there is no set interpretation as to what is an acceptable alpha value. A rule of thumb that applies to must situations is:

The Chronbach's coefficient alpha was calculated for each field of the questionnaire. The most identical values of alpha indicate that the mean and variances in the original scales do not differ much, and thus standardization does not make a great difference in alpha. Table 3.10 shows the values of Chronbach's Alpha for each factor of the questionnaire and the entire questionnaire. For the fields, values of Chronbach's Alpha were in the range from 0.697 and 0.897. This range is considered high; the result ensures the 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. Table 3.10: Reliability coefficient for the questionnaire

No.

Field

Chronbach's Alpha

1

Factors related to client

0.823

2

Factors related to cost

0.760

3

Factors related to time

0.697

4

Factors related to risk

0.728

5

Factors related to project characteristics

0.836

6

Factors related to external environment

0.897

All factors

0.929

Thereby, it can be said that it is proved that the questionnaire is valid, reliable, and ready for distribution for the population sample.

3.10 Research sample The target groups in this study are client's of construction projects and their representatives. Accordingly, there are two types of population were considered in this study. The first population is the procurement specialists as client's representative, who were worked in different organizations in the Gaza Strip in construction field. The second population is the Engineering Offices, who were assigned by the clients to manage and supervise of construction projects and these offices registered by the Engineers' Association in Gaza Strip. According to the Engineers' Association in Gaza Strip in the beginning of January 2013, the total number of these engineering offices is 120 offices and they are classified as follows: the first class has 77 offices; and the second class has 43 offices. The researcher targeting only the first class of engineers' offices because they have a good experience in procurement method management for a whole large construction projects in the Gaza Strip.

3.11 Sample size, questionnaire distribution and collecting data For the first population, the number is determined by the researcher as not large as there are 34 procurement specialists worked in different organizations who owned a

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) 

n= n'/ [1+(n'/N)]

(Kish equation)

Where: 

N = total number of population



n= sample size from finite population



n' = sample size from infinite population = S²/V²; where S² is the variance of the population elements and V is a standard error of sampling population. (Usually S = 0.5 and V = 0.06)

So, for 77 first class of engineers' consulting offices: 

n= n'/ [1+(n'/N)]



n'= S²/V² = (0.5)²/(0.06)² = 69.44



N = 77



n= 69.44/ [1+(69.44 / 77)] = 37

This means that the questionnaire should be distributed to 37 first class of engineers' consulting offices in order to achieve 94% confidence level. According to previous results of sample sizes, 84 questionnaires were distributed as follows: 34 to procurement specialists and 50 to engineers' consulting offices. 68 questionnaires were received (81%) as follows: 29 (85%) from procurement specialists and 39 (78%) from engineers' consulting offices as respondents. These percentages are shown in Table 3.11. Table 3.11 : Percentages of received questionnaires

Type Procurement specialists Engineers' consulting offices Total

Concerned sample size

No. of respondents

Percentage

34 50 84

29 39 68

85 % 78 % 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. Table 3.12: Frequency of job title of the respondents

Position

Frequency

Percent

Director/Vice director

16

23.5

Procurement manager

19

27.9

Procurement assistant

8

11.8

Consultant

11

16.2

Projects Manager

9

13.2

Other

5

7.4

Total

68

100.0

3.12 Method of data analysis In order to be able to select the appropriate method of analysis, the level of measurement must be understood. For each type of measurement, there is/are an appropriate method/s that can be applied and not others. In this research, ordinal scales were used. Ordinal scale as shown in Table 3.13 is a ranking or a rating data that normally uses integers in ascending or descending order. The numbers assigned to the important (1, 2, 3, 4, 5) do not indicate that the interval between scales are equal, nor do they indicate absolute quantities. They are merely numerical labels. Likert scale is shown in Table 3.13 (Cheung et al, 2004; Iyer and Jha, 2005; Ugwu and Haupt, 2007) Table 3.13: Ordinal scale used for data measurement

Item

Very high important

High important

Medium important

Scale

5

4

3

64

Low Very low important important 2

1

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.

4.2 Part one: Organizational profiles This section mainly designed to provide general information about the respondents in terms of position, years of experience, qualifications, type of institutions, and the type of projects.

4.2.1 Position of respondent Table 4.1 shows the frequency and percent of job title of the respondent that are 23.5 % were director or vice director, 27.9% of respondents were procurement managers, 11.8% of respondents were

procurement assistants, 16.2% of respondents were

consultants, and 13.2% of respondents were projects manager. It can be seen that more than 69.1% of the respondents have a good procurement experiance which support the quality of gained information. Table 4.1: Frequency and percent of position of the respondents

Position Director/Vice director Procurement manager Procurement assistant Consultant Projects manager Others Total

Frequency 16 19 8 11 9 5 68 66

Percent % 23.5 27.9 11.8 16.2 13.2 7.4 100.0

4.2.2 Experience years of the respondents Experience as a general concept comprises knowledge of or skill in or observation of some thing or some event gained through involvement in or exposure to that thing or event. Table 4.2 shows that, 10.3% of the respondents have years of experience between 1 less than 5 years, 32.4 % of the respondents have years of experience between 5 - less than 10 years, and it can be seen that respondents with an experience more than 10 years have the highest percentage (57.3 %), which is cross checked with the obtained results in the position of the respondent (more than 69.1% of the respondents have a good procurement experiance). This gives a good indicator that the respondents have a good experience in procurement field. Moreover, the variety of experiences between each group will enrich the research with different knowledge and information. Table 4.2: Experience years of respondents

Years of experience in the line of work

Frequency

Percent %

From 1 to less than 5 years

7

10.30

From 5 to less than 10 years

22

32.40

From 10 to less than 15 years

7

10.30

From 15 to 20 years

20

29.40

More than 20 years

12

17.60

Total

68

100.0

4.2.3 Qualification of the respondents As depicted in Table 4.3 below, it is clear that 38.2% of the respondents have a master degree while the most of the respondents have a bachelor's degree. This result also support the quality of gained information from respondents who are almost qualified and experienced. Table 4.3: Qualification of respondents

Qualification PhD Master B.Sc Diploma Total

Frequency 0 26 42 0 68

67

Percent % 0.00 38.20 61.80 0.00 100.0

4.2.4 Type of institution Table 4.4 shows that, 11.8 % of the respondents are governmental, 16.2% of the respondents are international institution, 7.4 % are NGO‟s, 10.3% are municipalities, and the most representitive type are engineer's consulting offices which represent 54.4% from the total sample. Private sector such as investor companies doesn‟t participate in this questionnaire. It is important to point that most of the constructed projects were designed, procused, and supervised by engineer's consulting offices. The high percentage of this category reflects

a good

indicator

to

ensure

from quality

information beside the other general information. Table 4.4: Type of institutions

Institution type Governmental International Non-governmental (NGO) Municipality Private sector Consultancy office Total

Frequency 8 11 5 7 0 37 68

Percent % 11.80 16.20 7.40 10.30 0.00 54.40 100.0

4.2.5 Type of projects the organizations are dealing with Table 4.5 shows that (89.4%) of the surveyed organizations are dealing with both building construction and infrastructure projects (Roads, water, and sewage) as those two fields are the prevailing construction fields in Gaza Strip. Furthermore, Table 4.5 demonstrates that (36.20%) from respondents are involved, in a way or another, in building works, (21.30%) are involved in roads works, (31.90%) are involved in water and sewerage works, and only (10.60%) are involved in electro mechanics works. Table 4.5: Type of projects the organizations are dealing with

Type of projects your organization dealing with Buildings Roads Water & Sewage Electro mechanics Total 68

Frequency Percent % 51 36.20 30 21.30 45 31.90 15 10.60 141 100.0

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

1 – less than 2M 2 – less than 5M 5 – less than 10 M More than or equal 10 M Total

Frequency 12 21 14 21

Percent % 17.60 30.90 20.60 30.90

68

100.0

4.3 Part two: Factors affecting the selection of procurement method 4.3.1 Main factor groups affecting the selection of procurement method This part consists of results and discussion of main factors that affecting the selection of procurement method in Gaza Strip. These factors were grouped into six groups. The first group is related to client factors. The second group is related to cost factors. The third group is related to time factors. The fourth group is related to risk factors. The fifth group is related to project characteristics factors. The last group is related to the external environment factors. The results of this part of study provide an indication of the relative importance index and rank of the major groups affecting the seletion of procurement method in Gaza Strip. Table 4.7 shows summary of major groups ranking according to each type of target group and Table 4.8 shows summary of ranking according to all respondents. 69

Table 4.7: RII and rank for the main factors for each type of target group

No. 1. 2. 3. 4. 5. 6.

Factor groups Factors related to client Factors related to cost Factors related to time Factors related to risk Factors related to project characteristics Factors related to external environment All factors

Procurement specialist RII Rank (%) 75.60 1 74.42 3 73.40 4 73.24 5 75.08 2 67.41 6 72.42

Engineer's consulting office RII Rank (%) 76.83 1 73.43 2 64.41 5 71.78 4 72.00 3 62.42 6 69.06

Table 4.8: RII and rank for the main factors for all responses

No 1. 2. 3. 4. 5. 6.

Factor groups

Mean

Factors related to client Factors related to cost Factors related to project characteristics Factors related to risk Factors related to time Factors related to external environment Mean Value

3.82 3.69 3.66 3.62 3.41 3.23 3.52

RII (%) 76.33 73.82 73.30 72.44 68.21 64.51

P-value

Rank

0.000 0.000 0.000 0.000 0.000 0.025

1 2 3 4 5 6

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.

4.3.2 The relationship among the selection of procurement method groups This part discusses the significant correlation among the main groups affecting the selection of procurement method in the Gaza Strip. Table 4.9 shows that the correlation coefficient is statistically significant at α = 0.05 among these groups: “factors related to client”, “factors related to cost”, “factors related to time”, “factors related to risk”, “factors related to project characteristics”, and “factors related to external environment”groups because the p-value (Sig.) is less than 0.05. In summary, the result indicates that there is a statistically significant correlation at α = 0.05 among all the main groups.

72

Table 4.9: Correlation coefficient among main groups affecting procurement method selection Factors Client

Cost Time

Risk Project characteristics External environment

Client

Pearson Correlation Sig. Pearson Correlation Sig. Pearson Correlation Sig. Pearson Correlation Sig. Pearson Correlation Sig. Pearson Correlation Sig.

Cost

Time

Project characteristics

Risk

External environment

1

0.593

1

0.000* 0.191

0.399

0.010

0.000*

0.427

0.528

1

0.406

1

0.000* 0.000* 0.000* 0.467

0.448

0.362

0.432

1

0.000* 0.000* 0.001* 0.000* 0.307

0.391

0.584

0.467

0.717

0.005* 0.000* 0.000* 0.000*

0.000*

1

4.4 Part three: sub-factors affecting the selection of procurement method 4.4.1 Group one: sub-factors related to client The relative importance index (RII) and rank of sub-factors related to client are summarized in Table 4.10 Table 4.10: RII and the rank for “Factors related to client” *The mean is significantly different from 3

No. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Paragraph

4.29

RII (%) 85.88

4.25

85.00

0.000*

2

4.24

84.71

0.000*

3

3.72

74.41

0.000*

4

3.69 3.66 3.63 3.62

73.82 73.13 72.65 72.35

0.000* 0.000* 0.000* 0.000*

5 6 7 8

3.24

64.78

0.018*

9

3.82

76.33

Mean

Client's financial capability Client's experience in procurement methods Availability of qualified personnel (procurement staff) The degree of desired client involvement Accountability Flexibility for changes and variations Client reputation Client's trust in other parties Client's nature and culture (public or private)

Average

73

P-value

Rank

0.000*

1

From Table 4.10, client's financial capability sub-factor has been ranked by the all respondents in the first position with RII equals 85.88%, Mean = 4.29, and P-value = 0.000 which is smaller than the level of significance   0.05 . The sign of the test is positive, so the mean of this sub-factor is significantly greater than the hypothesized value 3. We conclude that the respondents agreed that this sub-factor is the most important one in factors related to client group. Client's experience in procurement methods sub-factor has been ranked by the all respondents in the second position with RII equals 85.00%, Mean = 4.25, and P-value = 0.000 which is smaller than the level of significance   0.05 . The sign of the test is positive, so the mean of this sub-factor is significantly greater than the hypothesized value 3. We conclude that the respondents agreed that this sub-factor is very important factor in client group. Client's nature and culture (public or private) sub-factor has been ranked by the all respondents in the ninth position (The last position) with RII equals 64.78%, Mean = 3.24, and P-value = 0.018 which is smaller than the level of significance   0.05 . The sign of the test is positive, so the mean of this paragraph is significantly greater than the hypothesized value 3.

4.4.2 Group two: sub-factors related to cost The relative importance index (RII) and rank of sub-factors related to cost are summarized in Table 4.11. Table 4.11: RII and rank for “Factors related to cost” *The mean is significantly different from 3

No. 1. 2. 3. 4. 5.

Paragraph

Mean

Price competition Price certainly prior to commencement Design cost Cost control Consultant fees

Average

4.49 3.90 3.59 3.40 3.10 3.69

RII (%) 89.80 77.94 71.76 67.94 62.06 73.82

P-value

Rank

0.000* 0.000* 0.000* 0.000* 0.141

1 2 3 4 5

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.

4.4.3 Group three: sub-factors related to time The relative importance index (RII) and rank of sub-factors related to time are summarized in Table 4.12. Table 4.12: RII and rank for “Factors related to time” *The mean is significantly different from 3

No. 1. 2. 3. 4. 5. 6. 7.

Paragraph

4.35 3.72 3.56 3.35 3.35 2.81

RII (%) 87.00 74.41 71.18 67.06 67.06 56.18

2.71

54.12

3.41

68.21

Mean

Time constrains of project Minimize design time Speed Time control Delay in the project completion time Delivery time schedule Delays in obtaining environmental approval

Average

P-value

Rank

0.000* 0.000* 0.000* 0.002* 0.009* 0.097

1 2 3 4 5 6

0.013*

7

From Table 4.12, time constrains of project sub-factor has been ranked by the all respondents in the first position with RII equals 87.00%, Mean = 4.35, and P-value =

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.

4.4.4 Group four: sub-factors related to risk The relative importance index (RII) and rank of sub-factors related to risk are summarized in Table 4.13 Table 4.13: RII and rank for “Factors related to risk” *The mean is significantly different from 3

No. 1. 2. 3. 4.

Paragraph

Mean 4.16 4.03 3.53 2.75 3.62

Risk avoidance/allocation Responsibility allocation Disputes & arbitration Geotechnical investigation

Average

RII (%) 83.28 80.60 70.61 54.93 72.44

P-value

Rank

0.000* 0.000* 0.000* 0.021

1 2 3 4

From Table 4.13, risk avoidance/allocation sub-factor has been ranked by the all respondents in the first position with RII equals 83.28%, Mean = 4.16, and P-value = 0.000 which is smaller than the level of significance   0.05 . The sign of the test is positive, so the mean of this sub-factor is significantly greater than the hypothesized

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.

4.4.5 Group five: sub-factors related to project characteristics The relative importance index (RII) and rank of sub-factors related to project characteristics are summarized in Table 4.14. Table 4.14: RII and rank for “Factors related to project characteristics” *The mean is significantly different from 3

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Paragraph

Mean 4.43 4.31 4.10 3.85 3.84 3.78 3.61 3.57 3.50 3.31 3.22 3.04 2.97 3.66

Degree of project complexity Project size Project type and nature Project completion at estimated cost Constructability of design Quality level of project Project completion at estimated time Funding method Available resources of project Project payments modality Expected performance of project Project site location Project methodology

Average

77

RII (%) 88.53 86.18 82.00 77.01 76.76 75.52 72.24 71.47 70.00 66.18 64.41 60.88 59.39 73.30

P-value

Rank

0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.007* 0.009* 0.261 0.371

1 2 3 4 5 6 7 8 9 10 11 12 13

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 subfactor is significantly greater than the hypothesized value 3. We conclude that the respondents agreed that this sub-factor is very important factor in project charactristics group. Project methodology sub-factor has been ranked by the all respondents in the thirteenth position (The last position) with RII equals 59.39%, Mean = 2.97, and P-value = 0.371 which is greater than the level of significance   0.05 . Then the mean of this sub-factor is insignificantly different from the hypothesized value 3. We conclude that the respondents agreed that this sub-factor is not important factor in project charactristics group.

4.4.6 Group six: sub-factors related to external environment The relative importance index (RII) and rank of sub-factors related to external environment are summarized in Table 4.15

78

Table 4.15: RII and rank for “Factors related to external environment” *The mean is significantly different from 3

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Paragraph Availability of procurement system in the local market Procurement policy Legal issues/factors Market competitiveness Other parties involvement/role/participation Political considerations Market completion/structure Economic conditions Number of competitors Commercial conditions Worker conditions Technology Material availability Stakeholder integration Environment impact Social factors

Average

Mean

RII (%)

P-value

Rank

4.07

81.47

0.000*

1

4.00 3.99 3.78 3.35 3.31 3.15 3.12 3.10 3.03 3.00 2.90 2.81 2.74 2.66 2.57 3.23

80.00 79.71 75.59 67.06 66.18 62.94 62.35 62.06 60.59 60.00 57.94 56.18 54.71 53.24 51.47 64.51

0.000* 0.000* 0.000* 0.000* 0.005* 0.196 0.162 0.437 0.350 0.280 0.313 0.072 0.028* 0.001* 0.001*

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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.

4.4.7 Ranking of sub-factors affecting the selection of procurement method in the Gaza Strip The relative importance index (RII) and rank of each of the sub-factors affecting the selection of procurement method in construction projects in the Gaza Strip

are

presented in Table 4.16 according to all respondents and each type of target group Table 4.16: RII for sub-factors affecting the selection of procurement method

No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Factor 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 Availability of procurement system in the local market

Responsibility allocation Procurement policy Legal issues/factors Price certainly prior to commencement Project completion at estimated cost Constructability of design Market competitiveness Quality level of project Minimize design time The degree of desired client involvement Accountability Flexibility for changes and variations

Procurement specialist RII (%) Rank 91.00 1 89.60 2 85.80 6 87.60 3 86.80 4

Engineers All respondents consulting office RII (%) Rank RII (%) Rank 88.80 1 89.80 1 87.60 4 88.60 2 88.20 3 87.00 3 85.40 5 86.20 4 85.20 6 85.80 5

84.80

7

85.20

6

85.00

6

80.80

9

88.60

2

84.80

7

84.20 86.00

8 5

82.60 80.60

9 11

83.20 82.00

8 9

80.60

10

82.00

10

81.40

10

77.20 80.40 79.40

18 11 13

83.00 79.40 80.00

8 15 13

80.60 80.00 79.80

11 12 13

76.60

20

79.60

14

78.00

14

78.00

16

76.40

17

77.00

15

72.40 77.20 77.20 74.40

25 17 18 22

80.00 74.40 74.40 74.40

12 22 20 20

76.80 75.60 75.60 74.40

16 17 18 19

71.00

30

77.00

16

74.40

20

78.00

15

70.80

26

73.80

21

73.20

24

73.20

23

73.20

22

80

No.

Factor

23 24

Client reputation Client's trust in other parties Project completion at estimated time Design cost Funding method Speed Disputes & arbitration Available resources of project Cost control Time control Other parties involvement/role/participation Delay in the project completion time Project payments modality Political considerations Client's nature and culture (public or private) Expected performance of project Market completion/structure Economic conditions Consultant fees Number of competitors Project site location Commercial conditions Worker conditions Project methodology Technology Delivery time schedule Material availability Geotechnical investigation Stakeholder integration Delays in obtaining environmental approval Environment impact Social factors

25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

Procurement specialist RII (%) Rank 69.60 33 69.00 34

Engineers All respondents consulting office RII (%) Rank RII (%) Rank 74.80 18 72.60 23 74.80 19 72.40 24

72.40

26

72.20

25

72.20

25

71.00 78.60 79.40 73.60 72.40 70.40 75.20

29 14 12 23 27 32 21

72.40 66.20 65.20 68.40 68.20 66.20 61.00

24 30 33 28 29 32 38

71.80 71.40 71.20 70.60 70.00 68.00 67.00

26 27 28 29 30 31 32

64.80

42

68.80

27

67.00

32

71.80

28

63.60

36

67.00

34

68.20 66.20

35 37

64.60 66.20

34 31

66.20 66.20

35 35

67.80

36

62.60

37

64.80

37

64.80

41

64.20

35

64.40

38

70.40 65.60 63.40 65.60 63.40 63.40 64.80 63.40 62.80 65.60 61.40 57.80 58.60

31 39 45 38 44 45 42 47 48 39 49 53 51

57.40 60.00 61.00 59.40 59.00 58.40 56.40 56.20 54.40 49.20 52.40 52.80 51.80

44 40 39 41 42 43 45 46 47 51 49 48 50

63.00 62.40 62.00 62.00 60.80 60.60 60.00 59.40 58.00 56.20 56.20 55.00 54.80

39 40 41 42 43 44 45 46 47 48 48 50 51

61.40

49

48.80

53

54.20

52

58.60 55.80

52 54

49.20 48.20

52 54

53.20 51.40

53 54

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From Table 4.16, the most important factors agreed by the procurement specialists, engineer's consultant offices, and all respondents as the sub-factors affecting the selection of procurement method in the Gaza Strip were: price competition; degree of project complexity; time constrains of project; project size; client's financial capability;

client's experience in procurement methods; availability of qualified

personnel (procurement staff); risk avoidance/allocation; project type and nature; and availability of procurement system in the local market. This can be summarized and shown by Table 4.17. Table 4.17: The top ten significant sub-factors affecting the selection of procurement method

No. 1 2 3 4 5 6 7 8 9 10

Factor 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 Availability of procurement system in the local market

Procurement specialist RII Rank (%) 91.00 1

Engineers consulting office RII (%)

Rank

88.80

1

All respondents RII Rank (%) 89.80 1

89.60

2

87.60

4

88.60

2

85.80

6

88.20

3

87.00

3

87.60

3

85.40

5

86.20

4

86.80

4

85.20

6

85.80

5

84.80

7

85.20

6

85.00

6

80.80

9

88.60

2

84.80

7

84.20 86.00

8 5

82.60 80.60

9 11

83.20 82.00

8 9

80.60

10

82.00

10

81.40

10

According to procurement specialists, engineer's consulting offices, and all respondents; it was obtained from Table 4.17 that the price competition was the most important sub-factor as it has the first rank among all sub-factors with relative important index (RII) equal 91.00% for procurement specialists, 88.80% for engineer's consultants, and 89.80% for all respondents and it has a similar rank for all parties as it affects directly on the selection of procurement method in the Gaza Strip. This agreement between all target groups is traced to the difficult economical situation and fund limitations which Gaza Strip suffers. These problems can be affect strongly on the

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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.

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Project size sub-factor has been ranked by the procurement specialist respondents in the third position with RII equal 87.60%. It has been ranked by the engineer's consulting offices respondents in the fifth position with RII equal 85.40% and has been ranked by the all respondents in the fourth position with RII equal 86.20%. This factor is considered as more important for the procurement specialist respondents than for consultants. This result is the same with Odhigu et al., (2011) result. Client's financial capability sub-factor has been ranked by the procurement specialist respondents in the fourth position with RII equal 86.80%. It has been ranked by the engineer's consulting offices respondents in the sixth position with RII equal 85.20% and has been ranked by the all respondents in the fifth position with RII equal 85.80%. Odhigu et al., (2011) explains that each procurement system is chosen for a particular project based on certain criteria which use in the selecting procurement systems and one of the most important those criteria is client's financial capability. Client's experience in procurement methods sub-factor has been ranked by engineer's consulting offices and all respondents in the sixth position with RII equal 85.20% and 85.00% respectively and it has been ranked by the procurement specialists in the seventh position with RII equal 84.80% and it is obtained that this sub-factor has to a certain extent similarity rank for all parties as it affects directly on the selection of procurement method in the Gaza Strip. Shiyamini et al., (2007), Maizon et al., (2006), Mortledge et al., (2006), and Franco et al., (2002) illustrated that this sub-factor is one of the most important factors influencing the selection of procurement methods. In addition, the result of this study for this sub-factor is compatable with Odhigu et al., (2011) and Husam & Sedki (2009) results as they ranked client's experiance factor in the fifth and eighth position respectively. On the other hand, Shafik & Martin (2006) and Mahon (2011) investigates that client's experience sub-factor is in the second and third rank position respectively which they are a little differ than the result of this study. Availability of qualified personnel (procurement staff) sub-factor has been ranked by all respondents in the seventh position with RII equal 84.80%. It has been ranked by the procurement specialists in the ninth position with RII equal 80.80% and has been ranked by the engineer's consulting offices in the second position with RII equal 88.60.

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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 &

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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 subfactors with relative important index (RII) equal 80.60% for procurement specialists, 82.00% for engineer's consultants, and 81.40% for all respondents and it has a similar rank for all parties. This result is very close with the result of Husam & Sedki (2009) as he ranked this sub-factor in the fourteenth position in the Malaysian construction industry. Finally, according to Table 4.17 above, both procurement experts and consulting offices have at almost the same attitude towards ranking of the procurement selection factors. This may be attributed to the fact that they work under the same conditions and they are passing almost the same experience through purchasing and implementing the several stages of the construction projects.

4.5 Part four: perspective about procurement methods used in Gaza Strip 4.5.1 Are you satisfied about procurement system of your organization? Table 4.18: The satisfaction percentages of procurement system Result

Frequency

Percent %

Yes

43

63.2

No

25

36.8

68

100.0

Total

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.

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4.5.2 What is the most common procurement method selected by your organization? Table 4.19: The percentages of common procurement methods selected by organizations

Procurement method

Frequency

Percent %

Traditional procurement method (Separated)

47

69.10

Design and build procurement Method (Integrated)

5

7.40

Management procurement method (Packaged) Public private partnership procurement method (PPPP) as Build-Operate-Transfer method (BOT Method)

14

20.60

2

2.90

Table 4.19 shows that, the most common procurement method that selected by the respondants in construction projects in the Gaza Strip is a traditional procurement method (Separated method) which represent around two third (69.10%) from the total sample and the high percentage of this result reflects a bad indicator to ensure that there is no a variety of procurement methods selected and used in costruction projects in Gaza. The second most common procurement method is a management procurement method (Packaged method) which represent 20.60% from the total sample. It is important to point that other common procurement methods are very rarely selected in construction projects in the Gaza Strip. The result of this study are in the agreement with Babatunde et al., (2010) study. Abu Bakar

et al., (2009) mentioned that the traditional method was preferred by the organizations to procure the projects.

4.5.3 What is the most common type of traditional procurement method selected by your organization? Table 4.20: The percentages of common type of traditional procurement method selected by organizations

Traditional procurement method types

Frequency

Percent %

Lump sum method

15

22.00

Measurement method (Based on bill of quantities) Cost reimbursement as cost plus method

52

76.50

1

1.50

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Table 4.20 shows that, the most common type of traditional procurement method that selected by the respondants in construction projects in the Gaza Strip is a measurement method based on bill of quantities which represent 76.50% from the total sample and the high percentage of this result reflects a bad indicator to ensure that there is no a variety types of traditional procurement method selected in costruction projects in Gaza. The second most common type of traditional procurement method is a lump sum method which represent 22.00% from the total sample. It is important to point that cost plus method is very rarely selected in construction projects in the Gaza Strip. The result of this study are in the agreement with Rosli et al., (2006) result. Davis et. al., (2008) stated that with traditional lump sum contracts the intention is that there should usually be a fair and balance of risk between parties. The balance can be adjusted as required, but the greater the risk to be assumed by the contractor. So, this method is widely selected in construction projects but is used less than a measurement method.

4.5.4 What procurement methods are you familiar with? Table 4.21: The percentages of procurement method familiarity

Procurement method

Frequency

Percent %

Traditional procurement method (Separated)

51

75.00

Design and build procurement method (Integrated)

6

8.80

Management procurement method (Packaged) Public private partnership procurement method (PPPP) as Build-Operate-Transfer method (BOT Method)

8

11.80

3

4.40

Table 4.21 shows that 75% of the respondents are familiar with traditional procurement method as this method is widely experienced, known, and spread in different organizations in the Gaza Strip while only 25% of the respondents are familiar with other procurement methods as shown in Table 4.21.

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4.5.5 What types of procurement method would you like to see more use in the Gaza Strip? Table 4.22: The percentages of procurement method types would like be used more in Gaza

Procurement method

Frequency

Percent %

Traditional procurement method (Separated)

9

13.20

Design and build procurement method (Integrated)

38

55.90

Management procurement method (Packaged) Public private partnership procurement method (PPPP) as Build-Operate-Transfer method (BOT Method) Total

4

5.90

17

25.00

68

100.00

As depicted in Table 4.22 above, it is clear that more than a half (55.90%) of the respondents would like to see a design and build procurement method is used more in the Gaza Strip while only 13.20% of the respondents would like to see a traditional procurement method used more in the Gaza Strip. This result support that the repondants would like to deal with a non traditional procurement methods and applied a new procurement methods rather than a traditional method in the future in construction projects in Gaza. Enshasi and Modough (2012) finding that from three case studies exposed in Gaza Strip is the existence of a proportional relation between awarding bids to lowest price and the problems encountered during implementation when used a traditional procurement method. Accordingly, there is a need to change the traditional system for contractor selection and awarding contracts from the “lowest price” to “multi-criteria selection” practices. This can be implemented by establishing alternative procurement methods such as design and built method to select contractors based on technical and financial criteria.

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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.

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CHAPTER 5 DEVELOPING A FRAMEWORK 5.1 Introduction The decision to select the appropriate procurement method to implement a construction project is crucial. Though it does not necessary lead to a successful project but with other factors taken into consideration can influence the success of the project. From the researcher points of view, clients and consultants in the Gaza Strip do not have a specific procedure in selecting their procurement method to implement their construction projects but base it on familiarity with a particular method. Hence clients use procurement methods compatible with their corporate environments. So, most of clients in the Gaza Strip use the traditional procurement method as mentioned in the result in Chapter 4 because they do not have the relevant experience and familiarity for other non-traditional methods. This is as a result of the fact that there, is no theoretical framework on which to derive either an ideal or an optimum approach to select the appropriate procurement method. One of the objectives of this research was aimed to developing a framework using the multi-attribute utility approach (MAUA) as a decision support system for the selection of appropriate procurement method for construction projects in the Gaza Strip. The conceptional framework of the multi-attribute utility approach (MAUA) was suggested in this chapter to match clients„ prioritized factors with the benchmarked performance of the procurement methods in achieving a selection criterion (utility coefficient), to select appropriate procurement method for construction projects in Gaza Strip.

5.2 Multi-attribute utility approach (MAUA) Fellows et al., (1983) stated that a multi-attribute utility approach is a methodology which can be used as a tool to measure objectivity in an otherwise subjective area of management. As a procurement system is the overall managerial approach by which a client commissions and obtains a project, the multi-attribute utility approach was considered to be the foremost technique appropriate for examining the criteria of clients and the preferences of procurement experts and consultants weights for each method in the

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.

5.3 Data collection procedure A survey instrument in the form of questionnaire was used to capture the necessary data for this approach. Procurement specialists and consultants who are involved in the decision of selecting a procurement method were asked to prioritize the factors influencing the selection of procurement method based on Likert scale and tested using Cronbach α of the SPSS package at 5% significant level. The factors with Important Index exceeding or equal to 81% were recognized as important significant factors based on the consensus of the respondents to be used in factor analysis. From the questionnaire result analysis as mentioned in Chapter 4, ten factors were identified as significant important factors affecting the selection of procurement method in construction projects in the Gaza Strip which are

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)

5.4 Data analysis Considering a decision-making problem with M alternatives procurement methods and N significant factors whereby the alternatives procurement methods is denoted as: ai (for i = 1, 2, 3, M) significant factors as Cj (for j = 1, 2, 3 …N). Trianbtapyllou et al., (1997) assumed that the decision maker knows the performance values aij (for i = 1, 2, 3, M and j = 1, 2, 3, N) of each of procurement method in terms of each of the significant decision factor. Also that for each significant decision factor, the decision maker has determined its relative importance denoted as Cj (for j = 1, 2, 3, N). Lastly that the relative importance of the N factors satisfies the following normalization constraint

This is termed the rationalized priority rating and is calculated as

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

For i = 1, 2, 3, …………. M where Pi is the preference value of procurement method aij (i = 1, 2, 3, M) when all the significant important factors are considered simultaneously. For maximization case in this research, the best alternative is the one which has the largest preference value. Table 5.1 below, published the rationalized priority rating (Cj) by the respondents in this research Table 5.1: Rationalized priority rating by respondents (Cj), source: questionnaire field survey (2013)

Respondents No.

Factor

RII (%)

Rationalized priority rating (Cj)

1

Price competition

89.80

0.105

2

Degree of project complexity

88.60

0.104

3

Time constrains of project

87.00

0.102

4

Project size

86.20

0.101

5

Client's financial capability

85.80

0.101

6

Client's experience in procurement methods Availability of qualified personnel (procurement staff) Risk avoidance/allocation

85.00

0.100

84.80

0.099

83.20

0.097

Project type and nature Availability of procurement system in the local market Total

82.00

0.096

81.40

0.095

853.80

1

7 8 9 10

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.

5.5 Multi-attribute utility approach application Two forms will be used to apply the multi-attribute utility approach (MAUA). In the first form, procurement experts are asked to rate the suitability of procurement methods in achieving each significant factor based on a Likert scale. The second form was developed from consultants to calculate the benchmark performance values (aij) of different procurement methods in order to identify the most appropriate procurement method in construction project.

5.6 Multi-attribute utility approach verification MAUA verification and validation are essential parts of the conceptional framework development process if MAUA to be accepted and used to decision support system. Validation ensures that the approach meets its intended requirements in terms of the methods employed and the results obtained.

5.6.1Verification Cases Two cases were taken to evaluate the MAUA verifications and to measure its accuracy and strength in selection of appropriate procurement method. Three procurement

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.

5.6.1.1 Case1: Design and build of Wadi Gaza wastewater treatment plant The following case shows the results of MAUA verification. Three procurement experts participated in Coastal municipalities‟ water utility (CMWU) project. Design and build procurement method was selected for this project. The contract value for this project was $ 1,304,000.00 with project duration of 365 calendar days. The project was completed on 2013. The three experts were asked to rate the suitability of procurement methods in achieving each significant factor based on a Likert scale, the results introduced in Table 5.2 below and Table 5.3 shows the weighted sum model results for the selection appropriate procurement method.

96

Table 5.2: The average benchmark performance values (aijaver.) of procurement methods (Case 1)

Traditional No.

Significant factor aij1 aij2 aij3

Design & build

Public private partnership

Management

aij aij aij aij aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3 aver. aver. aver. aver.

1

Price competition

8

6

9

7.67

9

8

8

8.33

6

7

6

6.33

5

7

7

6.33

2

Project complexity

7

9

8

8.00

9

8

8

8.33

8

7

6

7.00

10

10

10

10.00

3

Time constrains

6

7

7

6.67

8

9

9

8.67

7

8

5

6.67

4

6

7

5.67

4

Project size

9

7

7

7.67

8

9

9

8.67

9

8

9

8.67

7

10

8

8.33

5

Client's financial capability

8

8

7

7.67

9

10

8

9.00

9

9

8

8.67

9

9

8

8.67

6

Client's experience

7

9

8

8.00

9

7

9

8.33

10

8

7

8.33

8

9

7

8.00

7

Availability of qualified personnel

7

8

9

8.00

8

7

8

7.67

7

9

9

8.33

6

4

5

5.00

8

Risk avoidance

7

7

8

7.33

9

9

10

9.33

8

10

8

8.67

4

6

7

5.67

9

Project type and nature

8

6

9

7.67

7

9

6

7.33

9

9

10

9.33

8

6

7

7.00

10

Availability of procurement system in the local market

9

8

10

9.00

8

8

7

7.67

8

7

6

7.00

7

9

7

7.67

97

Table 5.3: The weighted sum model results for the selection appropriate procurement method (Case 1) Traditional No.

Significant factor

Cj

Design & build

Management

Public private partnership

aij aver.

Result (Pi)

aij aver.

Result (Pi)

aij aver.

Result (Pi)

aij aver.

Result (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

10

Availability of procurement system in the local market

0.095

9.00

0.86

7.67

0.73

7.00

0.67

7.67

0.73

11

Total

1

12

Rank order

7.76

8.34

7.88

7.25

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.

5.6.1.2 Case 2: Construction of continuous medical education centre at the Islamic University The second case that was used to verify the MAUA was to construct a continuous medical education centre at the Islamic University in Gaza. This project was completed in 2010 and constructed under the Engineering office supervision. MAUA verification was done by targeting external three consultants for this project. Traditional procurement with measure and pay method was selected for this project. The contract value for this project was $ 309,000.00 with project duration of 120 calendar days. The three external consultants were asked to rate the suitability of procurement methods in achieving each significant factor based on a Likert scale, the results introduced in Table 5.4 and Table 5.5 shows the weighted sum model results for the selection appropriate procurement method.

99

Table 5.4: The average benchmark performance values (aijaver.) of procurement methods (Case 2)

Traditional No.

Significant factor aij1 aij2 aij3

Design & build

Public private partnership

Management

aij aij aij aij aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3 aver. aver. aver. aver.

1

Price competition

6

6

8

6.67

8

7

8

7.67

7

6

6

6.33

6

8

7

7.00

2

Project complexity

8

7

8

7.67

6

7

7

6.67

9

7

8

8.00

9

9

8

8.67

3

Time constrains

6

8

5

6.33

9

10

10

9.67

8

7

8

7.67

6

7

6

6.33

4

Project size

9

8

8

8.33

6

8

7

7.00

9

7

8

8.00

7

6

8

7.00

5

Client's financial capability

7

8

7

7.33

9

6

8

7.67

8

9

7

8.00

6

8

8

7.33

6

Client's experience

8

10

9

9.00

5

8

7

6.67

7

9

8

8.00

7

9

8

8.00

7

Availability of qualified personnel

9

9

7

8.33

7

7

8

7.33

8

8

10

8.67

8

7

6

7.00

8

Risk avoidance

7

8

8

7.67

9

8

8

8.33

8

7

8

7.67

8

7

8

7.67

9

Project type and nature

9

9

8

8.67

8

7

6

7.00

9

6

7

7.33

7

7

8

7.33

10

Availability of procurement system in the local market

10

8

9

9.00

7

5

6

6.00

8

8

7

7.67

8

7

6

7.00

100

Table 5.5: The weighted sum model results for the selection appropriate procurement method (Case 2)

Traditional No.

Significant factor

Cj

Design & build

Management

aij aver.

Result (Pi)

aij aver.

Result (Pi)

aij aver.

Result (Pi)

Public private partnership aij Result 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

4

Project size

0.101

8.33

0.84

7

0.71

8

0.81

7

0.71

5

Client's financial capability

0.101

7.33

0.74

7.67

0.77

8

0.81

7.33

0.74

6

Client's experience

0.100

9

0.90

6.67

0.67

8

0.80

8

0.80

7

Availability of qualified personnel

0.099

8.33

0.82

7.33

0.73

8.67

0.86

7

0.69

8

Risk avoidance

0.097

7.67

0.74

8.33

0.81

7.67

0.74

7.67

0.74

9

Project type and nature

0.096

8.67

0.83

7

0.67

7.33

0.70

7.33

0.70

10

Availability of procurement system in the local market

0.095

9

0.86

6

0.57

7.67

0.73

7

0.67

11

Total

12

Rank order

1

7.88

7.41

7.73

7.34

1

3

2

4

101

From the results obtained in Table 5.4 and Table 5.5, it was concluded that the weighted sum model results by consultants revealed that, traditional procurement method was the “best in class” i.e. the most appropriate procurement method option to implement this project with preference value Pi equal 7.88. Management procurement method was ranked second most appropriate procurement method with preference value Pi equal 7.73 while design and build method was ranked the third appropriate procurement method for this project with preference value Pi equal 7.41. Again, public private partnership procurement method was ranked the least appropriate procurement method with preference value Pi equal 7.34 and this result confirmed that the verification of MAUA approach.

5.7 A framework development The main objective of designing a conceptional framework is to assist a decision maker for construction procurement method selection. Additionally, the framework facilitates the following: 

Assists clients and their representatives in the initial decision on making an appropriate procurement selection for any kind of construction project;



Ensures systematic and consistent approach for procurement selection through the application of relevant research methods;



Provides better understanding on selection criteria which affect the procurement selection and various types of alternative construction procurement systems in practice;



Provides report on ranked list of procurement systems.

A framework was designed for construction clients and/or their consultants particularly those who use an unrealistic method to select the appropriate procurement system and are responsible for the selection process. Primarily, this framework guides how to select a most appropriate procurement system for a particular type of construction project. This framework not only considers the requirements of clients and project's profile but also the impact of external environment on procurement selection. In this way, it will be possible to ensure that the project is procured in an efficient and effective way that adds value for the client. Development of the framework consists of three main phases which 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 selection of procurement method  Using the wiegted sum model (i.e.

Factors related to client   

Identify client's financial capability Evaluate client's experience in procurement methods Assign qualification level for personnel (procurement staff)

additive utility) Formulate for model process (MAUA) Evaluate the model efficiency Obtain the model results

  

Factors related to cost 

Analyze price competition

Procurement Method Selection 

Traditional Procurement Method



and Construct Procurement Method



Management Procurement Method



Public Private Partnership Procurement Method

Procurement methods assessment Factors related to time 

Set the time constrains for the project

Factors related to project characterstics   



Determine the degree of project complexity Clarify the project size Explain project type and nature

 

Assessing procurement methods (Strength, advantages, methodologies, strategies, effectiveness) Set the rate for the suitability for each procurement method Involving consultants in assessment process

Factors related to external environment 

 

Decision Analysis (DA) Decide for an appropriate procurement method

putDesign

Evaluation for procurement method

Analyze the situation of procurement methods in the local market

  

Factors related to risk 

Decision making process &tool

Locate the risks related to the client 

Identify the raising problems Evaluate client's satisfaction Monitoring the project performance Review the decision process

Process and Modeling the factors Database Input Figure 5.1: Framework for the selection of an appropriate procurement method

104

Database Output

CHAPTER 6 CONCLUSION AND RECOMMENDATIONS 6.1 Introduction There are several procurement methods that clients can select to implement their construction projects and achieve their objectives. The selection of an appropriate procurement method is crucial to project success. To assist the clients and consultants in choosing the appropriate procurement method, a number of factors should be considered. An exploratory study of factors affecting the selection of procurement method was conducted in this research to determine the level of importance and influence for each factor. The researcher relied on literature review, field survey to achieve the goals of this research. In the process of conducting this research, some conclusions are emerged. General recommendations and recommendations for future research are included in this chapter.

6.2 Conclusion Based on the results obtained from this research, the following research conclusion are drawn: 

A total of 54 factors affecting the selection of procurement method were synthesized in the main six groups in the survey, which were shown to be reliable. Data were collected from

a representative sample of professional

procurement staff and consultants in the Gaza Strip. The findings from the empirical survey of this study show that there are twelve most influential factors/criteria affecting the selection of procurement method in construction projects in Gaza Strip which are 1.

Price competition (RII = 89.80%),

2.

Degree of project complexity (RII = 88.60%),

3.

Time constrains of project (RII = 87%),

4.

Project size (RII = 86.20%),

5.

Client's financial capability (RII = 85.80%),

6.

Client's experience in procurement methods (RII = 85%),

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 six least influential factors, as evaluated by procurement specialists and consultants, are: material availability, geotechnical investigation, stakeholder integration, delays in obtaining environmental approval, environment impact, and social factors.



It was concluded that, both procurement specialists and consultants generally agree on the ranking order of the factors affecting the selection of procurement method. This agreement confirms the influential effect of those factors on the selection of procurement system which provide a level of validation for this research. According to the results of this study, it was concluded that, there is

no

difference

of the opinions between

procurement specialists

and

consultants in the factors affecting the selection of procurement method at the significance level of 0.05. 

The results give a general indication that both the conventional (traditional) and non conventional procurement methods are currently embraced in Gaza Strip. This study reveals approximately two-thirds (69.10%) of construction projects are executed using variants of traditional procurement method; 20.60% are through variants of management procurement method; 7.40% are executed through design and build method; and 2.90% are executed through public private partnership (PPP) method in Gaza.



The procurement methods in use are still much of variants of traditional methods. Gaza Strip construction remains in the phase of almost exclusively using traditional methods. This may be presumably due to procurement staff and

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. 

The majority of respondents have indicated that current procurement methods (most prominently traditional) have directly contributed to projects overrunning in terms of cost and time, suggesting that this method is unsuitable for a modern, progressive construction industry in Gaza. It is clear that more than a half (55.90%) of the

respondents would like to see a design and build

procurement method used more in Gaza Strip. Only 13.20% of the respondents would like to see a traditional procurement method used more in Gaza Strip. This result support that the respondents would like to deal with a non traditional procurement methods and apply a new procurement methods rather than a traditional method in the future in construction projects in Gaza. 

Among the variant types of traditional procurement method, measurement method based on bill of quantities (Measure and pay method) had the highest selection share. The popularity of this method is mainly due to the government influence on the construction industry of Gaza Strip. Government as a major client and the regulator neglected the development of alternative procurement methods. Bureaucratic red tape of the Government created a barrier for the growth of other alternative procurement methods to have high accountable and transperant system.



It was concluded that the combination of national culture and organizational culture of construction in Gaza has created an environment that did not favor the use of new procurement methods. The organizational culture of construction in Gaza is characterized by the separation of design and construction from the

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.



Clients and consultants should monitor the quality and performance of procurement methods which used in their organizations in terms of hire a qualified procurement staff in order to obtain the true decision related to the selection of procurement method.



It is recommended to use the proposed framework as a guideline (Figure 5.1) which detailed in previous chapter to assist procurement managers and consultants in the selection of an appropriate procurement method in the construction project effectively in the Gaza Strip. Procurement managers and consultants can use this framework to assess the quality level of a planning of construction project in terms of procurement method selection.



It is also recommended that training courses, seminars, and workshops in procurement should be conducted. These activities would improve the local practice in the selection process and increase the capabilities of procurement staff

in using mathematical models for the selection of an appropriate

procurement system. 

The client‟s actual needs, requirements, objectives and project goals must be interested and accurately conveyed to the project team in order to enable the project team to develop a sound procurement strategy and system. 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.

6.4 Recommendations for future research The research results have identified several areas that require further research efforts. The following points discuss suggestions for expanding upon the current this research 

A follow-up advance study on the non-traditional procurement methods such as design and built procurement methods.



Future research should focus on developing models for the selection of an appropriate procurement method. These models could include detail projectspecific factors such as the project type, the degree of project complexity, and time constrains of project, and others.



The factors affecting the selection of procurement method studied from procurement specialists and engineer consultants respective only. So it is important to repeat this study and take and add contractors, investors and donor respective.



A follow-up study that further researches the impact of the type of procurement methods on the project performance would be beneficial. The future researches could be examine in-depth the performance of several construction projects together with the procurement methods selected and implemented.



It is necessary to repeat this research every 5 years to observe the new trends of procurement staff and consultants.

109

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Annex (1): Questionnaire (English)

116

ISLAMIC UNIVERSITY - GAZA ENGINEERING FACULTY CIVIL ENGINEERING DEPARTMENT MASTER PROGRAM IN CONSTRUCTION MANAGEMENT

(Questionnaire) In fulfillment of MSc thesis requirement FACTORS AFFECTING THE SELECTION OF PROCUREMENT METHOD IN CONSTRUCTION PROJECTS IN GAZA STRIP The aim of this questionnaire is to study the factors affecting the selection of procurement method in construction projects in Gaza Strip. This questionnaire is required to be filled with relevant facts as much as possible. All data included in this questionnaire will be used only for academic research and will be strictly confidential. After all questionnaires are collected and analyzed, interested participants of this study will be given feedback on the overall research results.

Researcher Osama I. El Agha Supervised by Dr. Nabil I. El Sawalhi

June, 2013 117

Part One: General information: Please add (√) as appropriate: 1. Position Director/Vice director Consultant

Procurement manager Projects Manager

Procurement assistant Other

2. Years of experience in the line of work From 1 to less than 5 years From 10 to less than 15 years More than 20 years

From 5 to less than 10 years From 15 to 20 years

3. Qualification Master

B.Sc.

Diploma

4. Institution type Governmental Municipality

International Private Sector

Non-governmental (NGO) Consultancy office

5. Type of projects your organization dealing with Buildings

Roads

Water & Sewage

Electro mechanics

6. Value of executed projects executed in the last five years (in million dollars) 1 – less than 2M 5 – less than 10 M

2 – less than 5M More than or equal 10 M

Part Two: Main Factors affecting the selection of procurement method in your organization Please identify (carefully) the degree of importance of the main factors affected the selection of procurement method in your organization Very High Important = 5 Low important = 2

High Important = 4 Very low important = 1

118

Medium important = 3

Degree of importance No.

Main factor

A

Factors related to client

B

Factors related to cost

C

Factors related to time

D

Factors related to risk

E F

Very high = 5

High =4

Medium =3

Low =2

Very low = 1

Factors related to project characteristics Factors related to external environment

Part Three: Sub-factors affecting the selection of procurement method in your organization From your experience, please express your opinion on the importance of the following sub-factors affecting the selection of procurement method in construction projects in the Gaza Strip. (Please tick the appropriate box). Very High Important = 5

High Important = 4

Low important = 2

Very low important = 1

Medium important = 3

Degree of importance No.

Factors

Very high 5

A

Factors related to client

1

Client's nature and culture (public or private)

2

Client reputation

3

Client's experience in procurement methods

4

Client's trust in other parties

5

Flexibility for changes and variations

6

Client's financial capability

7

Accountability

8

The degree of desired client involvement Availability of qualified personnel (procurement staff)

9

119

High 4

Medium 3

Low 2

Very low 1

Degree of importance No.

Factors

Very high 5

B

Factors related to cost

1

Price competition

2

Design cost

3

Consultant fees

4

Price certainly prior to commencement

5

Cost control

C

Factors related to time

1

Speed

2

Minimize design time

3

Time constrains of project

4

Time control

5

Delays in obtaining environmental approval

6

Delay in the project completion time

7

Delivery time schedule

D

Factors related to risk

1

Risk avoidance/allocation

2

Responsibility allocation

3

Disputes & arbitration

4

Geotechnical investigation

E

Factors related to project characteristics

1

Degree of project complexity

2

Project type and nature

3

Funding method

4

Project site location

5

Project size

6

Project payments modality

7

Quality level of project

8

Project methodology

9

Expected performance of project

10

Available resources of project

120

High 4

Medium 3

Low 2

Very low 1

Degree of importance No.

Factors

Very high 5

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

12

Legal issues/factors Availability of procurement system in the local market Number of competitors

13

Technology

14

Stakeholder integration

15

Worker conditions

16

Material availability

11

High 4

Medium 3

Low 2

Part Four: General Questions 1. Are you satisfied about procurement system of your organization? Yes No 2. What is the most common procurement method selected by your organization? Traditional Procurement Method (Separated) Design and Construct Procurement Method (Integrated) Management Procurement Method (Packaged) Public Private Partnership Procurement Method (PPPP) as Build-OperateTransfer method (BOT Method) 121

Very low 1

3. What is the most common type of traditional procurement method selected by your organization? Lump Sum Method Measurement Method (Based on Bill of Quantities) Cost Reimbursement as Cost Plus Method 4. What procurement methods are you familiar with? Traditional Procurement Method (Separated) Design and Construct Procurement Method (Integrated) Management Procurement Method (Packaged) Public Private Partnership Procurement Method (PPPP) as Build-OperateTransfer method (BOT Method) 5. What forms of procurement method would you like to see more use of in Gaza Strip? Traditional Procurement Method (Separated) Design and Construct Procurement Method (Integrated) Management Procurement Method (Packaged) Public Private Partnership Procurement Method (PPPP Method) 6. Finally, do you think that a simple model for the selection of procurement method could be useful and applied in construction projects in the Gaza Strip? Yes

No

Thanks for your cooperation… Researcher Osama I. El Agha

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