Scholarly article on topic 'Using PIPS to Minimize Causes of Delay in Saudi Arabian Construction Projects: University Case Study'

Using PIPS to Minimize Causes of Delay in Saudi Arabian Construction Projects: University Case Study Academic research paper on "Computer and information sciences"

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{"delay project causes and factors" / "public construction" / "Saudi Arabia" / "best value" / "performance information procurement system (PIPS)"}

Abstract of research paper on Computer and information sciences, author of scientific article — Majed Alzara, Jacob Kashiwagi, Dean Kashiwagi, Abdulrahman Al-Tassan

Abstract Saudi Arabia has been facing issues with completing construction projects on time and on budget. It has been documented that 70% of public construction projects are delayed. A case study was performed at a University campus in northern Saudi Arabia, identifying the major causes of project delays. The University was experiencing delays from 50% to 150%. The delay factors were gathered from the University Projects Director. The University's delay factors were then compared to delay factors experienced on Saudi construction projects, identified by performing a literature research. The comparison identified nine causes of delays that both studies documented. The study also proposes a solution to minimize the nine major delay factors. A literature research identified one construction management method, the Performance Information Procurement System (PIPS), has documented multiple times its ability to improve project performance and minimize delays.

Academic research paper on topic "Using PIPS to Minimize Causes of Delay in Saudi Arabian Construction Projects: University Case Study"

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Procedía Engineering 145 (2016) 932 - 939

Procedía Engineering

www.elsevier.com/locate/procedia

International Conference on Sustainable Design, Engineering and Construction

Using PIPS to minimize causes of delay in Saudi Arabian construction projects: university case study

Majed Alzaraa*, Jacob Kashiwagib, Dean Kashiwagic, Abdulrahman Al-Tassand

aM.S., School of Sustainable Engineering and the Built Environment, Arizona State University at Tempe, 660 S College Ave., Tempe, AZ 85281,

United States

bAssistant Research Professor, School of Sustainable Engineering and the Built Environment, Arizona State University at Tempe, 660 S College

Ave., Tempe, AZ 85281, United States cProfessor, P.E., School of Sustainable Engineering and the Built Environment, Arizona State University at Tempe, 660 S College Ave., Tempe,

AZ 85281, United States

d Associate Professor, College of Architecture and Planning, King Saud University at Riyadh, P.O.Box 57448, Riyadh 11574, Saudi Arabia

Abstract

Saudi Arabia has been facing issues with completing construction projects on time and on budget. It has been documented that 70% of public construction projects are delayed. A case study was performed at a University campus in northern Saudi Arabia, identifying the major causes of project delays. The University was experiencing delays from 50% to 150%. The delay factors were gathered from the University Projects Director. The University's delay factors were then compared to delay factors experienced on Saudi construction projects, identified by performing a literature research. The comparison identified nine causes of delays that both studies documented. The study also proposes a solution to minimize the nine major delay factors. A literature research identified one construction management method, the Performance Information Procurement System (PIPS), has documented multiple times its ability to improve project performance and minimize delays.

© 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-reviewunder responsibility of the organizing committee of ICSDEC 2016

Keywords: delay project causes and factors; public construction; Saudi Arabia; best value; performance information procurement system (PIPS)

* Corresponding author. Tel.: (480)727-0753. E-mail address: majed.alzara@asu.edu

1877-7058 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license

(http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-review under responsibility of the organizing committee of ICSDEC 2016

doi:10.1016/j.proeng.2016.04.121

1. Introduction

Saudi Arabia has been experiencing a construction boom for the past three decades. The construction industry is considered to be a big business, estimated to be worth more than $3.9 trillion yearly worldwide [13]. The estimated nearly investment budget for the Saudi construction industry from 1990 to 2000 was $234 billion [1]. In 2011, nearly $147 billion was at stake because of nonperforming public projects [12]. On the other hand, the Saudi Ministry of Finance allocated about $48 billion for 2,330 projects in 2013 alone. In 2014, the government expected to launch projects worth a total value of more than $66 billion [11]. However, the majority of public projects are not completed, and the chronic delays that beset most public projects make Saudi citizens uncertain about the likelihood they will gain any utility from these projects [11]. According to Assaf and Al-Hejji, 70% of public projects were delayed in Saudi Arabia [6]. Are delayed projects a new phenomenon in Saudi Arabia? In 1983, Zain Al-Abedien reported that 70% of projects were delayed when the Ministry of Housing and Public Works was responsible for them. Since that time, Saudi Arabia has suffered from project postponement problems. The university campus being used as a case study is considered to be one of these projects. This campus is located in Northern Saudi Arabia and was established in 2005. It has been under construction since 2006.

2. Problem

The university campus should have been completed in 2012. However, only two buildings of the university campus are operational, despite the fact that, as of 2015, there are 22 buildings in the execution phase. As a result, the percentages of delayed construction were from 50-150%. The stakeholders of university made decisions to solve the problems that were causing delayed projects and slowed construction performance at the university campus.

3. Methodology

This study depended on a literature review to explore most important factors that caused delays in public construction projects in Saudi Arabia. A stakeholder at the university was interviewed to learn about the delay factors from an owner's perspective. After that, the delay factors at the university were compared with most important delay factors around the country, which were collected from extant literature. The comparison showed the important factors that causes of delay projects at case study campus. The study then explained how the best value approach (BVA) and performance information procurement system (PIPS) worked. Finally, the results of the study showed that the important delay factors could be solved by using PIPS.

4. Hypothesis and Questions

BVA and PIPS help solve important delay factors in Saudi Arabia.

• What are the important delay factors in public projects in Saudi Arabia?

• What causes delayed projects at the university?

• What is the relationship of the delay factors in Saudi public projects to the university's projects?

• How can PIPS mitigate the causes of delayed projects in Saudi Arabia?

5. Objectives of the Study

Show important delay factors in public projects in Saudi Arabia. Find the causes for delays in projects on the university campus. Show how delay factors at the case study university are classified within what was found in the literature review. Show how PIPS can deal with important delay factors to improve project performance in Saudi Arabia. Show how PIPS can deal with important delay factors to improve project performance in Saudi Arabia. This research is considered a step to implement PIPS in Saudi Arabia.

6. Literature Review

Because of the high number of previous studies, there is a large amount of data related to delayed projects. According to Al-sultan, 70% of Saudi public projects faced time overages. Al-Barak reported that poor estimation practices and a shortage of skilled contractors cause project delays [3]. Also, he believed that the national economy's stagnation was a factor that caused delays [2]. In 1999, Al-khalil and Al-Ghafly performed research to find the causes of delays in Saudi public utility projects. They investigated among owners, consultants, and contractors to determine who was responsible for project delays. They found that about 60% of projects begun between 1985 and 1994 were delayed. The owner and the consultant often blame the contractor for the project delays. Conversely, a contractor often accuses the owner and consultant of delaying the project [5]. Likewise, delayed projects impact both the owner and contractor. The owner loses revenue because of the uncompleted project, which forces him or her to rent temporary premises. Contractors also incur overhead costs because delayed projects keep them from getting another project [6]. Other studies mentioned that government departments, as owners of public projects in Saudi Arabia, are affected by the disruption of public development plans, the financial execution plan, and community annoyance caused by the delay of particular projects. Whereas, a contractor is influenced through; increasing period of project, increasing overhead cost, and hindering contractor of finding another business opportunity [7]. All parties aim to complete construction projects on time. However, many previous studies found major factors that affected the performance of organizations working on construction projects. Al-Karashi and Skitmore found about 112 factors responsible for project delays. They also obtained about 39 more factors from respondents in their study. The authors found 131 total factors [7]. So, here in this study classified the related causes in four levels: owner-related causes, contractor-related causes, consultant-related causes, and other-related causes. An intensive review of significant, frequent factors that had appeared in previous studies about the Saudi Arabia construction industry was then made.

Owners play an active role in reducing project delays. Therefore, project period is considered to be a delay factor. Owners often cannot predict how long projects will take [1, 5, 15]. Extension time is one of the owner-related delay factors. The owner approved extension time on 87% of projects [5]. In addition, owners postpone making progress payments to other parties, which becomes another delay factor [1, 5, 7, 8, 9, 10, 15]. Another study found that project orders changed by the owner disrupted contractors' schedules, causing project delays [1, 6]. Also, reviewing and approving project documents were mentioned as factors leading to the postponement of projects [6]. Also, suspension work in construction projects by the owner affects the project's performance [6, 7].

Al-Barak noted that the main causes of contractors' failures were skill shortages, poor estimation practices, and poor decision-making [2]. Project duration is also a contractor-related delay factor when the contractors have poor planning and scheduling skills [1, 5, 15]. Qualified contractors may prevent project delays because of their experience, knowledge, and ability to field a trained workforce [5, 6]. Assaf and Al-Hejji found many factors related to contractors, such as conflicting views about subcontractors' schedules in project implementation and poor subsurface conditions. Some contractors do not expect the worst things that could happen on the worksite, for instance, a high water table [6]. Other recent studies found that a lack of experience and a shortage of manpower are major causes of project delays [6, 7]. Poor site management and supervision are also considered factors in the previously mentioned studies in addition to Mahamid's study, which has many other negative effects on the construction industry [15]. Moreover, when a contractor has cash flow problems, it will naturally affect the proj ect's completion [1, 5, 6, 7].

The previous studies revealed that some of the delay factors can be linked to a consultant. According to Assaf and Al-Hejji, a consultant is responsible for project delays by producing design documents and reviewing and approving design documents [1, 6]. Moreover, consultants are connected with diverse factors that cause project delays, such as failing to find mistakes and discrepancies in design documents and rigidity about deals [6]. In addition, consultants need to have high levels of experience in order to perform their roles. Projects also often require hiring of a number of consultants [1, 7].

It is hard to classify some factors under the three main categories of owner, contractor, and consultant. For example, a delay in material delivery is considered a factor that has a degree of impact on project duration [6]. Also, a tendering system can be considered a significant factor that leads to the success of projects. Lowest bidding, which

is the system applied in most Middle East countries, is also considered a reason for the prevalence of project delays in Saudi Arabia [1, 5, 15]. In construction projects, although it is difficult to coordinate among construction parties, communication and coordination increase the project's chances of success. Conversely, increasing rework—doing a job more than one time—reduces project schedule control [15].

7. Interview of the Owner at the Case Study University (CSU)

In an interview with the director of department of projects at the CSU was conducted on 14-15 March, 2015, via Skype. It was discovered that of a total of 22 projects at the university, 17 were delayed. There were also 15 projects under construction on the university campus. There are another eight projects that are currently in the design stage. However, the planned operation of the university campus should have begun in 2012. Conversely, two buildings were operational until 2015. Hence, the percentages of delay in overrun time at the university were between 50% and 150%. It was also found that 99% of the university projects overran projected costs. So, the delay of construction projects at the university was caused by many factors that have links to the owner, contractors, consultants, and other factors.

It is obvious that there is no clear vision for projects. Also, there were only incomplete ideas when the university planned its construction projects. As a result, most of the university's projects do not reflect reality. There are huge projects with unrealistic requirements. Because of this, after a contractor delivers a building, it is found that its design is not appropriate for use, which happens because the designers had been controlled by the owner during the design stage. In addition, 88% of the university's projects are not well thought out, and these projects' budgets do not correspond with their design requirements. Consequently, when selecting a contractor, the owner often makes the decision to remove some work from the project in order to get the contractor price closer to the budget. The owner will find someone to complete these works later. This action delayed projects at the university because the removed works were based on work being done by the first contractor. For example, the first contractor may need the air duct system to be completed, which is removed from first contractor's works to another bid, to install a false ceiling. Consequently, the tendering system takes a long time to sing with a contractor and adds to the difficulty of governmental proceedings. Other factors are also related to the owner.

Contractors who want to obtain university projects must have classifications from the Ministry of Municipal and Rural Affairs. There are five classes, and each class shows the highest financial limit within the contractors' abilities. Owners may also make the decision to prevent low-class contractors from partaking in the competition by merging similar projects into one tender. However, that method increases the projects' sizes, which limits the university's ability to monitor them. Additionally, it is clear that there are poor organization within the project management department. Although there is no ability to manage many projects simultaneously, it is clear that there are many too many projects to progress through the implementation process. In addition, some delayed projects were found to need approval in order to use a particular system. However, the holder of authority was not a specialist, which led to slow approval. Also, the owner's employees were responsible for delaying projects at the university because they delayed progressive payments to the contractors.

The literature review found that one common delay on university projects was poor contractor performance. One project is separating itself from its contractor because of poor performance, the contractor's lack of qualifications, and a conflict among company partners. Withdrawing from a construction project sometimes requires procedures that can take up to ten years to complete. In addition, another contractor-related factor is a lack of experience. Although contractors must review the proposal and inform the owner about items that are not mentioned in the proposal, contractors and consultants discovered many items that were not mentioned in the project proposals but were uncovered during implementation. Besides, despite contractors have about two months after selecting a contractors and before signing contracts, the contractor do not utilize that time for reviewing proposals to find any luck of works. Moreover, most contractors on the university's projects lacked project-management skills. For example, risks that could cause damage to projects were not clear to some project managers. The size of these projects often exceeded the contractors' ability. In addition, some contractors had too many projects, and that affected their ability to finish projects on time. Also, contractors suffered from a shortage of manpower. Additionally, contractors delayed the payment of salaries to their laborers, which delayed projects when the laborers stopped working.

Poor consultant performance was also one of the causes of delay at the CSU. Some consultants would like to extend their contract with the owner and, therefore, delay projects. Hence, some works were suspended by the consultant without a convincing reason. In addition, another delay factor is that many mistakes are often discovered in the blueprints during the implementation stage. Also, it is found that there is lack of consultancy employees and that causes delay construction at the university. However, when the consultants' contracts have been finished and the projects have been delayed, the university's owner has resorted to contracting with an international consultant for all of the university's projects, which will save about $8 million, as opposed to contracting with more than one local consultant. In addition, when the owner contracts with one consultant for all campus projects, it reduces the extension of contracts for each project on campus if one of these projects is delayed. However, when a new consultant begins work, he or she is faced with some difficulties, such as the fact that most construction is already underway and that he or she needs time to understand what is going.

Others causes of delay are some factors that are not related to the three construction parties. Bidder procedure was one of the factors delaying university projects. Also, some parts of the procurement system are not clear, which makes employees spilt projects into multiple stages, which causes delays. Additionally, there are a large numbers of projects around Saudi Arabia that lack the necessary materials. For example, one contractor could not supply granite because there was high demand for it from contractors. Moreover, new regulations from the Ministry of Labor caused a shortage of manpower, as opposed to older regulations that helped contractors find manpower easily.

8. Data Analysis

Literature review showed that there were 27 most important factors that delayed public projects in Saudi Arabia. An interview was conducted with owner of the CSU, and that interview revealed 27 delay factors that delayed projects at the university, with a rate ranging between 50% and 150%. When the university delay factors were compared with most important delay factors, which were mentioned in previous studies in Saudi Arabia, it was found that nine delay factors from the CSU matched most important delay factors in Saudi Arabia, as shown in Figure 1. The remaining delay factors were not proved as important. The nine important delay factors are shown in

Table 1.

Important caisses of delay factors

27 Causes of delayed factors in the ease study university

27 most important causes ol" delayed factors 111 Saudi Arabia

Fig. 1. Comparison of the case study university's delay factors with those found in the literature review.

Table 1. Important Delay Factors at the CSU.

No. Important Causes of Delay at the CSU

Related to :

1 Late in Reviewing and Approving Design Documents

2 Delay in Progress Payments to Contractors

3 Poor Contractor Performance

4 Contractor's Lack of Qualifications

5 Lack of Contractor Experience

6 Shortage of Manpower

7 Lack of Consultancy Employees

8 Material Delivery Problems

_9_Bidder System_

Owner Owner

Contractor Contractor Contractor Contractor Consultant Other

8.1. Definition of Best Value Approach and Performance Information Procurement System (PIPS)

Dr. Kashiwagi created the best value approach (BVA) at Arizona State University (ASU) in 1991 as part of his PhD dissertation. BVA utilizes expertise in all aspects of life to minimize risk and increase performance through the use of logic and common sense. BVA relies on a special workplace environment that minimizes decision-making, management, direction, and control. Moreover, Kashiwagi and his team at the Performance Based Studies Research Group (PBSRG) at ASU also developed the best value procurement/performance information procurement system (BVP/PIPS) [14]. PIPS has been tested over 1,750 times on $6.3 billion in project value ($4 billion in construction projects and $2.3 billion in non-construction professional service projects), with a 98% success rate in six different countries and 31 states. Some examples of PIPS case studies shown in Table 2. PIPS increases a project's efficiency and performance while minimizing risk compared to the low-price bid. When PIPS was used, there were no documented delays. The PIPS process consists of four phases: pre-qualification (optional), selection, clarification, and execution, as shown in Figure 2.

Table 2. Examples of PIPS case studies [14].

Criteria United Airlines The state of Utah The University of Hawaii State of Minnesota

Duration 1996-1998 1999-2011 2000-2005 2005- present

Number of projects 32 4 11 247

Awarded cost $ 13 Million $ 64,405,100 $ 1,658,192 $97.2 Million

Satisfaction 100% N/A 92% 95%

On time 98% 100% 100% 100%

Within budget 100% 100% 100% 100%

No change orders 100% 100% N/A 100%

Fig. 2. The four phases of BVA/PIPS [14].

• Pre-qualification phase: This phase is optional. The pre-qualification phase educates vendors about BVA and how to submit performance information via metrics.

• Selection phase: There are four filters to find the best value vendor for a project. In filter 1, vendors should submit their price and project capability, which consists of three documents: level of experience (LE), risk assessment (RA), and value added (VA). Additionally, each of these documents should be a maximum of two pages. Filter 2 is an interview filter to determine the vendor's expertise. It should be used to interview those who will do the work, such as the project manager, to see if he/she can see into the future. The interview assists the committee in determining if a vendor has a clear vision for the work. This interview should be as short as possible. In Filter 3, the committee prioritizes criteria, giving weighing them a specific amount. Weighting could use percentages or numbers from 1-10. Filter 4 is a dominance check to find the BV vendor who provides lowest cost and information to minimize risk.

• Clarification phase: The vendor should clarify their offer and plan. Moreover, this phase should show what is outside of the project's scope and simplify the proposal to be clear about what will be done and what will be

accomplished. The vendor should submit a detailed technical schedule and a milestone schedule. In this phase, the owner and vendor should clarify everything related to the project. • Execution phase: During implementation work, the vendor should submit a weekly risk report (WRR) and a director's report (DR). The WRR is submitted as an Excel document that outlines the project's pathways and any deviation from the initial plan in terms of cost, time, and quality. In addition, this report provides a milestone schedule, risk management plan, and performance measurements. The DR consists of a set of multiple WRRs and details for each vendor's performance and any risk that needs attention.

This study shows that there are nine important delay factors that can be considered common to projects in Saudi Arabia. However, these nine important delay factors can be solved using BVA and PIPS. This analysis shows that BVA and PIPS can deal with these delay factors, as shown in Table 3.

The first of these delay factors is the bidder system, which is based on lowest price. This factor can be solved by changing the bidder system to PIPS, which uses many phases to select the highest-performing vendor who is the best value. PIPS is a procurement system that relies on performance to find the best value vendor, contrary to the current bid system in Saudi Arabia that relies on lowest price. The second and third delay factors are poor contractor performance and lack of experienced contractors, which can be solved in the selection phase of PIPS. This phase has many filters that determine the level of vendor experience. Also in this filter, vendors should submit risk-assessment documents that show the vendors' capability to see risks that could affect projects and how the vendor can mitigate risks. Moreover, the interview with the people who will do the work—or the project manager—will show if vendors have poor contractor performance or lack experience. Interview assists owner to recognize if contractors have clear vision of projects. Additionally, poor contractor performance can be reduced by implementing the clarification phase. In this phase, a vendor who has already been selected clarifies their offerings and planning process. The vendor should identify the scope of the work and submit a detailed technical schedule and a milestone schedule. That will show if the vendor can complete the work. The fourth delay factor is shortage of manpower, and that should be clarified in the risk assessment as a risk. Vendors should show how they can deal with this problem in the selection phase. The fifth delay factor is a contractor's qualifications, and that can be solved in the pre-qualification phase that informs vendors about best value and PIPS and shows them that PIPS relies on performance and how they must check their level of performance through numbers and matrices. In addition, during the selection phase, the vendor's experience level is discovered, which solves the contractor's qualification delay factor. The sixth delay factor is material delivery, and that can be solved in the selection and clarification phases. Risk assessment documentation in the selection phase should solve this delay factor. Expert vendors can see this problem and provide a plan B if necessary. Also, in the clarification phase, vendors should give detailed plans to show how they can mitigate the material delay factor. The seventh and eighth delay factors are the approval of design documents by the owner and delay in progress payments to the contractors. These two delay factors can be solved via building a best value environment within the organization. Best value depends on penalty principles related to common sense. Best value decreases management, decision-making, and control by utilizing expertise and increasing transparency. These are principles that assist owners in utilizing expert opinion to increase the approval rate of design documents. When an organization increases transparency and decreases control, the organization's progress increases, which solves delays in progress payments to contractors. Also, expert vendors will identify this problem as a risk in their risk assessment documents during the selection phase and clarify it in clarification phase, which assists in the solution of delays in progress payments to contractors. Finally, the ninth delay factor is a lack of consultancy employees, and this problem is solved in the selection phase. In this phase, the owner finds an expert vendor who has a high performance level and can complete works that already prove his or her abilities during the selection phase. So, expert vendors do the work well, which reduces the need for consultancy employees.

Table 3. How BV and PIPS Can Solve Important Delay Factors in Saudi Arabia.

Treating the Important Causes of Delayed Projects

Important Causes of Delayed Projects in Saudi Arabia (CSU)

How the Solutions Prevent Delay Factors

PQ S C E

Bidder System (Low Price)

XXX X PIPS Relies on Performance

Poor Contractor Performance Lack of Experienced Contractors Shortage of Manpower Contractor's Qualifications Material Delivery

Approval of Design Documents by Owner Delay in Progress Payments to Contractors Lack of Consultancy Employees

Level of Experience, Interview, Risk Assessment Level of Experience, Interview, Risk Assessment Risk Assessment,

Qualification of Vendor, Level of Experience

Risk Assessment, Show Plan B

Creating Best Value Environment

Creating Best Value Environment, Risk Assessment

Experience of Vendor Mitigates Factor

BV: Best Value Environment in Organization PQ: Pre-Qualification S: Selection C: Clarification. E: Execution

9. Conclusion

Important delay factors, which caused delays to projects in Saudi Arabia, can be solved with the application of BVA and PIPS. Most importantly, delay factors are solved through phases. These phases have many filters that help owners find good vendors based on their performance. These filters prevent delays in the construction of public projects in Saudi Arabia by using only select, high-quality contractors. Nine important delay factors were found by comparing important delay factors found in a literature review with those found at the CSU. One of these factors is the low bidder system, which caused the delay of many projects in Saudi Arabia. When the bidding system is changed to PIPS, it will prevent other delays from happening, such as the low bid environment. Seven of these important delay factors can be prevented when the level of experience and risk assessment documents are submitted via vendors. This study introduces BV and PIPS to stakeholders at the CSU to implement PIPS in future projects.

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