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PhD Thesis Chapter 11

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PhD Thesis Chapter 11
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  Chapter 11: Conclusions, recommendationsfor further work   The main question investigated in this study is how contractorsarrive at a bidding price, and how, and in what circumstances, thatprice is influenced by the apportionment of risk. The aim was tocompare analytical risk models proposed in the literature to whatcontractors actually do. Hitherto, most of the past research workhas focused on introducing yet more models. However, the low takeup of this proliferation of models indicated that more models wouldnot necessarily help. A better understanding was fundamentallyneeded of what contractors actually do when they put a bidtogether. Given the lack of a major study of this nature, theliterature review clearly justified the need for a study into howcontractors price risk in bids.Clearly, some studies have covered some aspects of howcontractors respond to risks. However, none has gone as far asexamining what contractors actually do. Specific questions thatneeded to be addressed were stated in section 3.6.5. It wasimportant to address these fundamental questions which hadhitherto remained fundamentally unanswered in relation to the lackof a comprehensive empirical material that describes the wholeprocess of how contractors actually put together a bidding price; thelack of a detailed account on how contractors actually priced risk inbids; and the lack of specific evidence that pricing is indeedsystematic in behaviour. These gaps in knowledge appeared to limit the extent to whichconstruction management researchers could inform thedevelopment of 60+ analytical propositions examined and classifiedwith a sufficient understanding of what contractors actually do. Therefore, it was thought that a participant observation of some livecases of tender preparation would provide the inductive, intensive,  and comprehensive means of ascertaining at firsthand whatcontractors actually do when they put a bid together. To prepare the grounds for the case studies, a preliminaryinvestigation involving seven contractors in Ghana and five in theUK was carried out using unstructured interviews and documentaryanalysis. All the interviews with 12 contractors lasted approximately17 hours. The documents examined included their risk schedules,cost guides, and meeting agenda and minutes. This helped to gainan initial understanding of their bid-pricing practices; review queriesdeveloped during the literature review; identify themes to helpformulate an appropriate case study design; and create opportunityfor negotiating access to observe some live cases of tenderpreparation. The case studies involved four different contractors from bothGhana and the UK. In each case study, the researcher shadowed thewhole tender process from start to finish using participantobservation, interviews, documentary analysis, and diary method inorder to log a chronology record of every aspect of the bidpreparation. The case studies lasted a total of 20 weeks(approximately 180 hours). These empirical studies were comparedto theoretical propositions and major differences were observedbetween theory and practice. The next sections summarize the mainissues in each Chapter and the extent to which the study objectiveshave been achieved. 11.1 Concluding overview of the study  The various sections of the thesis are reviewed to show the extentto which the study objectives have been achieved.  11.1.1 Literature review In Chapters Two and Three, past research was reviewed, first onprice formation, and second on risk analysis and apportionment inconstruction. The review on price formation was focused on capturing pricingactivities, ascertaining how contractors build up prices, learningabout what features they take account of, including the extent towhich they apportion risk, and the mechanisms that they use forbuilding up their contingencies. The review also covered:procurement methods, contractual arrangements, tenderingprocedures, and governance of the construction market at a policylevel. This was achieved mainly through a comprehensive review of literature from 45 different sources comprising of journal papers andstandard textbooks on estimating and tendering; procurement;construction contracts and law; and business economics. Clearly,the literature review showed the lack of comprehensive empiricalmaterial on the real process of how contractors arrive at a biddingprice from start to finish. Several experiential-based textbooks onthe subject were found. However, no major empirical of whatcontractors actually do in practice when they put a bid together wasfound. Hence, the case studies carried out here, where participantobservation was used to capture a detailed record of activitiesinvolved in the whole bid-pricing process of contractors contributesin filling some of the gaps identified in the literature. Thisunderstanding can form a basis for developing models andprogrammes for improving the work of contractors. The review on risk analysis and apportionment in construction wasachieved through a comprehensive review of literature from 68different sources comprising of journal papers and standardtextbooks in construction management and mainstream finance andeconomics, professional practice guides, construction industryreports, and case reports. The literature review covered the  relationship between risk and price in tendering, risk pricingmechanisms of contractors, and formal and analytical risk models inconstruction. It showed that there was no detailed empiricalmaterial on how contractors take account of risks in the wholetender process. Clearly, some interview and questionnaire studieshad tried to address the subject. However, not according to thecomprehensive scale to which it has been addressed here. Hence,the application of participant observation to investigate howcontractors take account of risks when calculating their bids forconstruction work contributes to filling some of the gaps identified inthe literature.In the same Chapter Three, 67 analytical models proposed forcontractors were examined and classified. The main underlyingassumptions and propositions in the development of risk modelswere also reviewed. This formed the basis of the theoretical dataagainst which the empirical studies was compared. Altogether, 16different techniques were used in developing the analyticalpropositions. The review of analytical approaches confirmed clearlythat the proposed models were not derived from a sufficientunderstanding of what contractors actually do. Neither was anyevidence found in support of the assumption of systematicbehaviour underlying most analytical approaches. 11.1.2 Research methodology  The combination of shortcomings in current approaches to riskanalysis led to the basic research question underpinning the study:how do contractors take account of risk when they are calculatingtheir bids for construction work? Clearly, the research required tofind answers to the questions raised by the critique in this studyneeded to be designed to observe what contractors do, rather thanmerely asking questions based on what the literature reports. Thus,a comprehensive, inductive and intensive strategy was required forcapturing pricing activities, ascertaining how contractors build up  prices, learning about what features they take into account,including the extent to which they apportion risk, and themechanisms that they use for building up their contingencies. Thisled to the choice of a participant observation case study strategy asfully explained in Chapter Four. The use of the method was veryexhausting and prolonged. However, it would not have beenpossible to carry out such a comprehensive study otherwise. Futureresearchers should pursue early planning and build sufficientcontingency into their research programme. As participantobservation represents a major ethnomethodological method of investigation, its application contrasts with the conventional use of the routine questionnaire and interview surveys in researchliterature and thus offers a fresh perspective that others can apply. 11.1.3 Preliminary investigations In Chapter Five, a preliminary investigation involving five UK contractors and seven Ghanaian contractors were reported. Theinterviews were mainly open and unstructured because of theexploratory nature of the study and they were intended to informthe design of the case study phase of the investigation. The 12contractors interviewed helped to develop an initial understandingof how contractors price work generally and risk specifically at thetender stage. Documents used by the contractors in the real biddingprocess were also collected and examined. Preliminary investigations involving UK contractors   The main findings of the preliminary investigations involving five UK contractors are summarized as follows.1.Risk is an important subject to contractors. Risk schedules weredeveloped for each project to help ascertain the appropriate riskto price, negotiate, or avoid. Regardless of workload, onecommon finding was that contractors are less frustrated to lose a

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Mar 10, 2018
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