Kunhui Ye

Concentration in the international construction market

With the involvement of an increasing number of contractors in the international construction market, venturing overseas has been fraught with fierce competition and considerable uncertainties. This underscores the importance of examining the extent to which the intensity of competition (IoC) for international construction business is moderate. Concentration is a conventional IoC measure. By synthesizing four major concentration methods including concentration ratio, entropy, Gini coefficient and the Herfindahl index, a new model for measuring moderate IoC is thus proposed. Using the 28 years ENR‐based data of the top 225 international contractors (TIC 225) in the proposed model, the IoC for international construction business is found to be moderate, if the magnitude of the market shares occupied by the top four international contractors is 0.2735. The finding revises a popular view that international construction competition has been intensifying only since 2002. It is implied that the proposed model favours a better understanding of competition characteristics in the international construction market and provides new insights into the theories about concentration.

Developing Construction Professional Services in the International Market: SWOT Analysis of China

AbstractConstruction professional services (CPSs), such as architecture, engineering, and consultancy, are not only high value-added profit centers in their own right but also have a knock-on effect on other businesses, such as construction and the export of materials and machinery. Arguably, competition in the international construction market has shifted to these knowledge-intensive CPS areas. Yet CPSs represent a research frontier that has received scant attention. This research aims to enrich the body of knowledge on CPSs by examining strengths, weaknesses, opportunities, and threats (SWOT) of Chinese CPSs (CCPSs) in the international context. It does so by triangulating theories with quantitative and qualitative data gleaned from yearbooks, annual reports, interviews, seminars, and interactions with managers in major CCPS companies. It is found that CCPSs present both strengths and weaknesses in talents, administration systems, and development strategies in dealing with the external opportunities and...

Key Factors Considered in Compiling Tender Prices for China’s Public Works Projects

AbstractRecent decades have witnessed the evolution of tender evaluation approaches from using a sole parameter to using multiple criteria in the construction industry. The changes in the evaluation approach call for continuous improvement in tender pricing practices. Notwithstanding a large volume of existing studies, the way to price tenders properly in China’s public work sector has not been explored explicitly. Using a mix of research methods, such as a literature review, interviews, and a questionnaire survey, this study found seven factors critically important for contractors to price public work contracts in China. The research findings indicate that the key factors are characterized by the attributes of public works and national socioeconomic background and facilitate contractors in determining tender prices in due ways. While this study is situated in China’s public construction sector, it offers useful references for similar examinations of other construction contexts.

Corporate social responsibility disclosures in international construction business: trends and prospects

AbstractThere is increasing sophistication in corporate social responsibility (CSR) disclosures by international construction companies (ICCs). Nevertheless, a systematic analysis of the trends and prospects is yet to appear. This study fills that knowledge gap by providing an understanding of the idiosyncrasies of CSR disclosures and by offering suggestions for future reporting exercises. By examining the top fifty ICCs’ CSR/sustainability reports using content analysis, it is found that the more negative effects a company may have, the more remedial strategies it will disclose in a CSR report. ICCs from economically more developed countries maintain a high level of CSR disclosures, while their counterparts from developing countries have caught up in this CSR cause. As a way to improve the consistency and integrity of disclosed information, ICCs are increasingly adopting CSR reporting guidance frameworks and using third-party assurances. CSR disclosures present a high degree of uniformity while they also...

Response strategies to the competition in the Chinese construction market

The Chinese construction market is composed of 31 local markets which differ from each other in various aspects such as competition intensity. Contractors moving from one market to another need to consider the competition strategies and make due response to new competition situation in order to survive. Nevertheless, the research into response strategies to competition situations has been limited. Effective response strategies can assist contractors to respond to different competition environments. Based on the data collected from major cities in China, five typical competition situations are identified and six strategies are found effective to guide contractors’ response to various competition situations. For instance, a closer cooperation between main contractors helps contractors respond effectively where safety accidents occur frequently in the market. The research findings present new perspectives of developing competitive strategies in the Chinese construction market and provide recommendations for adopting a conduct–performance approach for examining response strategies in other construction markets.

A discriminant model for measuring competition intensity of construction market

Purpose – “Competition intensity” is a factor in addressing competitiveness. The understanding on competition intensity is prerequisite to the formulation of industrial competition policies as well as firms’ competition strategies. In the construction context, whereas competition intensity can be measured using a number of traditional approaches (e.g. competitor number, concentration), the measurement is often criticized for poor efficiency. The purpose of this paper is to propose a new model for measuring competition intensity in light of the theory of discriminant analysis. Design/methodology/approach – The proposed model is composed of predictor variables concerned with market operation as well as criterion variables that classify markets into a few predefined groups based on the values of competition intensity. Empirical data of Chinas local construction markets were collected to verify the proposed model. Findings – The research findings indicate that the model can offset the drawbacks of traditiona...

Market Structure of International Construction Professional Services: Evidences from Top Design Firms

Construction professional service (CPS) in the international arena has been very competitive despite that the industry is proliferating at a high rate. To excel in international business, CPS firms have the importance of building overseas competition strategies on a proper understanding of the international CPS (I-CPS) market. However, subject to borderless trade, information technology–based networking, global outsourcing, and changing forms of procurement, the I-CPS market structure has become more covert, intricate, and unstraightforward than before. Through examining business competition among top international design firms, this study aims to identify the attributes of the I-CPS market structure from two perspectives—concentration and turnover. Data from Engineering News-Record over the period 2001–2011 were collected to calculate market concentration ratios and turnover indices. The results show that I-CPS competition is characterized by atomism, much turbulence with a steady increase in competition intensity, and the predominant role of new entrants and exiting firms in market turnovers. The combination of concentration and turnover is found useful to address the attributes of the I-CPS market structure, which favors I-CPS firms to formulate international competition strategies in due ways.

Nexus between Contracting and Construction Professional Service Businesses: Empirical Evidence from International Market

AbstractThe construction market around the world has witnessed the growing eminence of construction professional services (CPSs), such as urban planning, architecture, engineering, and consultancy, while the traditional contracting sector remains strong. Nowadays, it is not uncommon to see a design firm taking over the work of a traditional main contractor, or vice versa, of overseeing the delivery of a project. Although the two sectors of contracting and CPS share the same purpose of materializing the built environment, they are as different as they are interrelated. Much has been mentioned about the nexus between the two but little has been done to articulate it using empirical evidence. This study examined the nexus between contracting and CPS businesses by offering and testing lead-lag effects between the two sectors in the international market. A longitudinal panel data composed of 23 top international contractors and CPS firms was adopted. Surprisingly, results of the panel data analyses show that C...

Underlying Knowledge of Construction Management Consultants in China

AbstractTo meet clients’ and owners’ multidimensional and changing requirements, construction management consultants (CMCs) ought to possess a diverse and dynamic knowledge structure. In China, although the population of CMCs has grown to the point of their being indispensable in the industry, their knowledge structure has not been explored explicitly. The study presented in this paper investigated this by first conducting a comprehensive content analysis of the curricula of the highest ranked construction management university courses in China. This was followed by in-depth interviews with experts, resulting in the identification of 22 main knowledge areas that can be grouped into technology, economy, management, and law. A questionnaire survey was then conducted among 115 experienced CMCs to evaluate the current level of knowledge in these areas together with their importance and need for improvement. The main findings demonstrate the significance of the identified 22 knowledge areas, and they also need...

A regional construction R&D evaluation system for China

Expenditure on R&D in China’s construction industry has been relatively low in comparison with many developed countries for a number of years—a situation considered to be a major barrier to the industry’s competitiveness in general and unsatisfactory as regards industry development of the 31 regions involved. A major problem with this is the lack of a sufficiently sophisticated method of objectively evaluating R&D activity in what are quite complex circumstances considering the size and regional differences that exist in this part of the world. A regional construction R&D evaluation system (RCRES) is presented, aimed at rectifying the situation. This is based on 12 indicators drawn from the Chinese Government’s R&D Inventory of Resources in consultation with a small group of experts in the field, and further factor analysed into three groups. From this, the required evaluation is obtained by a simple formula. Examination of the results provides a ranking list of the R&D performance of each of the 31 regions, indicating a general disproportion between coastal and inland regions and highlighting regions receiving special emphasis or currently lacking in development. The understanding on this is vital for the future of China’s construction industry.